<PAGE>
________________________________________________________________________________
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
CHECK THE APPROPRIATE BOX:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to SS240.14a-11(c) or SS240.14a-12
------------------------
TIME WARNER INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
------------------------
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
...............................................................................
2) Aggregate number of securities to which transaction applies:
...............................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
...............................................................................
4) Proposed maximum aggregate value of transaction:
...............................................................................
5) Total Fee Paid:
...............................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: .............
2) Form, Schedule or Registration Statement No.: .............
3) Filing Party: .............
4) Date Filed: .............
________________________________________________________________________________
<PAGE>
[LOGO]
March 30, 1995
Dear Stockholder:
You are cordially invited to attend the 1995 Annual Meeting of Stockholders
of Time Warner Inc. on Thursday, May 18, 1995, beginning at 11:00 A.M., local
time, at the City Center Theater, 131 West 55th Street, New York, New York
10019. I look forward to greeting as many of you as can attend the Meeting. A
post-meeting report of the proceedings will be sent to all stockholders.
Holders of Time Warner common stock are being asked to vote on all the
matters listed in the enclosed Notice of Annual Meeting of Stockholders. Your
Board of Directors recommends a vote 'FOR' the proposals listed as items 1, 2
and 3 in the Notice, and 'AGAINST' the stockholder proposals described in the
enclosed Proxy Statement.
Whether or not you plan to attend the Meeting in person, it is important
that your shares of Time Warner common stock be represented and voted at the
Meeting. Accordingly, after reading the enclosed Notice of Annual Meeting and
Proxy Statement, please sign, date and mail the enclosed proxy card or voting
instructions in the envelope provided.
Because of security procedures required for access to the City Center
Theater, if you plan to attend the Meeting in person, you must bring the
Admission Ticket included with the enclosed Notice of Annual Meeting of
Stockholders and Proxy Statement or a Time Warner employee identification card.
YOU WILL NOT BE PERMITTED INTO THE CITY CENTER THEATER WITHOUT IT. If you have
not received an Admission Ticket, please contact the Shareholder Relations
Department at (212) 484-6971.
Sincerely,
GERALD M. LEVIN
GERALD M. LEVIN
Chairman of the Board
and Chief Executive Officer
<PAGE>
TIME WARNER INC.
75 Rockefeller Plaza
New York, NY 10019
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1995
The Annual Meeting (the 'Annual Meeting') of Stockholders of Time Warner
Inc., a Delaware corporation (the 'Company'), will be held on Thursday, May 18,
1995 at the City Center Theater, 131 West 55th Street, New York, New York 10019,
commencing at 11:00 A.M., local time, for the following purposes:
1. To elect five directors for a term of three years and until their
successors are duly elected and qualified;
2. To consider and take action upon a proposed amended and restated
Time Warner Inc. Annual Bonus Plan for Executive Officers in order to
preserve the Company's tax deductions in light of the Omnibus Budget
Reconciliation Act of 1993;
3. To approve the appointment by the Board of Directors of the firm of
Ernst & Young LLP as independent auditors of the Company for 1995;
4. To consider and vote upon two stockholder proposals as described in
the attached Proxy Statement; and
5. To transact such other business as may properly come before the
Annual Meeting.
Only holders of the Company's common stock at the close of business on
March 27, 1995, the record date, are entitled to vote on the matters listed in
this Notice of Annual Meeting.
TIME WARNER INC.
PETER R. HAJE
Secretary
March 30, 1995
THE ANNUAL MEETING WILL COMMENCE PROMPTLY AT 11:00 A.M. TO AVOID DISRUPTION OF
THE MEETING, ADMISSION MAY BE LIMITED AFTER THE MEETING COMMENCES. HOLDERS OF
COMMON STOCK ARE REQUESTED TO SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED PRE-ADDRESSED REPLY ENVELOPE, WHETHER OR NOT THEY PLAN
TO ATTEND THE ANNUAL MEETING, SO THAT THEIR SHARES MAY BE REPRESENTED. ANY
RECORD HOLDER OF COMMON STOCK WHO HAS EXECUTED A PROXY AND IS PRESENT AT THE
ANNUAL MEETING MAY VOTE IN PERSON INSTEAD OF BY PROXY, THEREBY CANCELLING ANY
PROXY PREVIOUSLY GIVEN. NO STOCKHOLDER OF RECORD MAY APPOINT MORE THAN THREE
PERSONS TO ACT AS HIS OR HER PROXY AT THE ANNUAL MEETING.
YOU WILL BE REQUIRED TO SHOW THE ENCLOSED ADMISSION TICKET
OR A COMPANY ID CARD TO ATTEND THE ANNUAL MEETING.
<PAGE>
TIME WARNER INC.
75 Rockefeller Plaza
New York, NY 10019
PROXY STATEMENT
This Proxy Statement is being furnished to holders of common stock, par
value $1.00 per share ('Common Stock'), of Time Warner Inc., a Delaware
corporation (the 'Company'), in connection with the solicitation of proxies by
its Board of Directors for use at the Annual Meeting of the Company's
stockholders (the 'Annual Meeting') to be held on Thursday, May 18, 1995, at the
City Center Theater, 131 West 55th Street, New York, New York 10019, commencing
at 11:00 A.M., local time, and at any adjournment or postponement thereof, for
the purpose of considering and acting upon the matters set forth in the
accompanying Notice of Annual Meeting of Stockholders.
This Proxy Statement and accompanying forms of proxy and voting
instructions are first being mailed to holders of Common Stock on or about March
31, 1995.
VOTING AT THE ANNUAL MEETING; RECORD DATE; CONFIDENTIAL VOTING
Only holders of record of Common Stock at the close of business on March
27, 1995, the record date, are entitled to notice of and to vote at the Annual
Meeting. As of March 27, 1995, there were 379,770,491 shares of Common Stock
outstanding and entitled to be voted at the Annual Meeting.
Each holder of record of shares of Common Stock who is entitled to vote may
cast one vote per share held on all matters properly submitted for the vote of
the stockholders at the Annual Meeting.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting.
In accordance with the Company's confidential voting policy, all
stockholder proxies, ballots and voting materials will be confidentially
inspected and tabulated by independent inspectors of election and will not be
disclosed to the Company except under certain limited circumstances.
REQUIRED VOTE
A plurality of the votes duly cast is required for the election of
directors. The affirmative vote of a majority of the votes duly cast is required
to approve each of the other matters to be acted upon at the Annual Meeting.
Under the General Corporation Law of the State of Delaware, the state in
which the Company is incorporated, an abstaining vote is not deemed to be a
'vote cast.' As a result, abstentions and broker 'non-votes' are not included in
the tabulation of the voting results on the election of directors or issues
requiring approval of a majority of the votes cast and, therefore, do not have
the effect of votes in opposition in such tabulations. A broker 'non-vote'
occurs when a nominee
<PAGE>
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to
that item and has not received instructions from the beneficial owner. Broker
'non-votes' and the shares as to which a stockholder abstains are included for
purposes of determining whether a quorum of shares is present at a meeting.
PROXIES
All shares entitled to vote and represented by properly executed proxies
received prior to the Annual Meeting, and not revoked, will be voted at the
Annual Meeting in accordance with the instructions indicated on those proxies.
If no instructions are indicated on a properly executed proxy, the shares
represented by that proxy will be voted as recommended by the Board of
Directors. No stockholder of record may appoint more than three persons to act
as his or her proxy at the Annual Meeting.
If any other matters are properly presented at the Annual Meeting for
consideration, including, among other things, consideration of a motion to
adjourn the Annual Meeting to another time or place (including, without
limitation, for the purpose of soliciting additional proxies), the persons named
in the enclosed form of proxy and acting thereunder will have discretion to vote
on those matters in accordance with their best judgment to the same extent as
the person signing the proxy would be entitled to vote. The Company does not
currently anticipate that any other matters will be raised at the Annual
Meeting.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. A proxy may be revoked (i) by filing
with the Secretary of the Company, at or before the taking of the vote at the
Annual Meeting, a written notice of revocation or a duly executed proxy, in
either case later dated than the prior proxy relating to the same shares or (ii)
by attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not of itself revoke a proxy). Any written notice of
revocation or subsequent proxy should be sent so as to be delivered to Time
Warner Inc., 75 Rockefeller Plaza, New York, NY 10019, Attention: Secretary, or
hand delivered to the Secretary, at or before the taking of the vote at the
Annual Meeting.
A copy of the Company's Annual Report to Stockholders for the year 1994,
including financial statements, has been sent simultaneously with this Proxy
Statement or has been previously provided to all stockholders entitled to vote
at the Annual Meeting.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the election of the nominees
for election as directors; FOR approval of the amended and restated Time Warner
Inc. Annual Bonus Plan for Executive Officers; FOR approval of the appointment
of Ernst & Young LLP as independent auditors of the Company for 1995; and
AGAINST the stockholder proposals described in this Proxy Statement.
2
<PAGE>
CORPORATE GOVERNANCE
ELECTION OF DIRECTORS
The Company believes that it is in the best interest of Time Warner
stockholders that a majority of the members of the Company's Board of Directors
be directors who, in the Board's judgment, have no direct or indirect material
economic relationship with the Company other than as a result of customary
directors' compensation or stock ownership ('Unaffiliated Directors'). In
furtherance of this belief, the Company's By-laws provide that at the time the
Board determines the slate of nominees for director at an annual meeting of
stockholders, taking into account the election of such slate and the directors
who will continue in office, a majority of the members of the Board must be
determined by the Board to be independent directors within the meaning of the
By-laws. The Company also has a policy limiting the eligibility for nomination
by the Board of Directors as a non-employee director to persons who would be
less than 70 years old at the time of election.
The Board of Directors is divided into three classes, currently consisting
of five directors each. In January 1995, the Board of Directors elected Michael
A. Miles as a director to fill the vacancy resulting from the death of Hugh F.
Culverhouse. Of the 15 directors, 12 are Unaffiliated Directors and three are
Affiliated Directors.
The persons named in the enclosed proxy intend to vote such proxy for the
election of each of the five nominees named below, unless the stockholder
indicates on the proxy that the vote should be withheld from any or all of such
nominees. Each nominee elected as a director will continue in office until his
or her successor has been duly elected and qualified, or until his or her
earlier death, resignation or retirement.
The Board of Directors has proposed the following nominees for election as
directors at the Annual Meeting:
NOMINEES FOR TERMS EXPIRING IN 1998
Merv Adelson
Beverly Sills Greenough
Michael A. Miles
Donald S. Perkins
Raymond S. Troubh
The Company expects each nominee for election as a director at the Annual
Meeting to be able to accept such nomination. If any nominee is unable to accept
such nomination, proxies will be voted in favor of the remainder of those
nominated and may be voted for substitute nominees. All of such nominees are
currently directors and, except for Mr. Miles, were elected by the stockholders.
Set forth below is the principal occupation of, and certain other
information regarding, such nominees and other directors whose terms of office
will continue after the Annual Meeting.
3
<PAGE>
<TABLE>
<CAPTION>
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
NOMINEES FOR TERMS EXPIRING IN 1998
Merv Adelson ....................... 65 CHAIRMAN OF EAST-WEST CAPITAL ASSOCIATES. Mr. Adelson has served as
1989 Chairman of East-West Capital Associates (private investment
company) since April 1989. Mr. Adelson served as Vice Chairman and
a director of Warner Communications Inc. ('WCI') from January 1989
through August 1991. Prior to that, Mr. Adelson served as Chairman
and Chief Executive Officer of Lorimar Telepictures Corporation
from February 1986 until its acquisition by WCI in January 1989. He
is also a director of 7th Level, Inc. Mr. Adelson is an
Unaffiliated Director.
Beverly Sills Greenough ............ 65 CHAIRMAN OF LINCOLN CENTER FOR THE PERFORMING ARTS. Mrs. Greenough
1989 served as a director of WCI from 1982 to 1990. Mrs. Greenough has
served as the Chairman of Lincoln Center for the Performing Arts
since June 1994, having served as the Managing Director of The
Metropolitan Opera from 1991 and the President of the New York City
Opera Inc. from March 1989 through 1990. She has also served as
National Chairman of the March of Dimes Birth Defects Foundation.
She is also a director of American Express Company and Human Genome
Sciences Inc. Mrs. Greenough is an Unaffiliated Director.
Michael A. Miles ................... 55 FORMER CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF PHILIP
1995 MORRIS COMPANIES INC. Mr. Miles served as Chairman of the Board and
Chief Executive Officer of Philip Morris Companies Inc. (consumer
products) from September 1991 until July 1994, having served as
Vice Chairman and a member of the Board of Directors of Philip
Morris Companies Inc. and Chairman and Chief Executive Officer of
Kraft General Foods, Inc. from December 1989. He is also a director
of Dean Witter, Discover & Co., Dell Computer Corporation, Sears,
Roebuck and Co. and Thompson Minwax and is also a Special Limited
Partner in Forstmann Little & Co. Mr. Miles is an Unaffiliated
Director.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Donald S. Perkins .................. 68 FORMER CHAIRMAN OF JEWEL COMPANIES, INC. Mr. Perkins became President
1979 of Jewel Companies, Inc. (retailing) in 1965, Chairman of its Board
in 1970, and served as Chairman of its Executive Committee from
1980 to June 1983. He is also a director of AON Corporation, AT&T
Corp., Cummins Engine Company, Inc., Illinova and Illinois Power
Company, Inland Steel Industries, Inc., Kmart Corporation (Chairman
of the Board since January 1995), LaSalle Street Fund, Inc. and The
Putnam Funds (including all 84 of its funds). Mr. Perkins is an
Unaffiliated Director.
Raymond S. Troubh .................. 68 FINANCIAL CONSULTANT AND DIRECTOR OF VARIOUS COMPANIES. Mr. Troubh
1989 served as a director of WCI from 1979 to 1990. Mr. Troubh has been
a financial consultant, including service as a Senior Advisor at
Salomon Brothers Inc (investment banking), and a corporate director
for more than the past five years. He is also a director of ADT
Limited, America West Airlines, Inc., American Maize-Products
Company, Applied Power Inc., ARIAD Pharmaceuticals, Inc., Becton,
Dickinson and Company, Benson Eyecare Corporation, Foundation
Health Corporation, General American Investors Company, Inc.,
Manville Corporation, Olsten Corporation, Petrie Stores
Corporation, Riverwood International Corporation, Triarc Companies,
Inc. and WHX Corporation. Mr. Troubh is an Unaffiliated Director.
DIRECTORS WHOSE TERMS EXPIRE IN 1996
Edward S. Finkelstein .............. 70 CHAIRMAN OF FINKELSTEIN ASSOCIATES, INC. Mr. Finkelstein became the
1984 Chairman of Finkelstein Associates, Inc. (consulting) in October
1992. Prior to that, he served as the Chairman of the Board and
Chief Executive Officer of R.H. Macy & Co., Inc. (and its
predecessor) (retailing) from August 1980 until April 27, 1992. Mr.
Finkelstein is an Unaffiliated Director.
Carla A. Hills ..................... 61 CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF HILLS & COMPANY AND FORMER
1993 UNITED STATES TRADE REPRESENTATIVE. Ambassador Hills became
Chairman and Chief Executive Officer of Hills & Company
(international trade consultants) in March 1993, having served in
President Bush's Cabinet as the United States Trade Representative
from February 1989 to January 20, 1993. Ambassador Hills is also a
director of American International Group, Inc., AT&T Corp., Chevron
Corporation and Trust Company of the West. Ambassador Hills is an
Unaffiliated Director.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Henry Luce III ..................... 69 CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE HENRY LUCE FOUNDATION,
1967 INC. Mr. Luce served as a Vice President of the Company from 1964
through 1980. Mr. Luce became Chairman and Chief Executive Officer
of The Henry Luce Foundation, Inc. in 1990, having served as
President and Chief Executive Officer since 1958. Mr. Luce is an
Unaffiliated Director.
Reuben Mark ........................ 56 CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF COLGATE-PALMOLIVE COMPANY.
1993 Mr. Mark has served as the Chairman of the Board and Chief
Executive Officer of Colgate-Palmolive Company (consumer products)
since 1986. Mr. Mark is also a director of Toys 'R' Us, Inc. and
The New York Stock Exchange, Inc. Mr. Mark is an Unaffiliated
Director.
Francis T. Vincent, Jr. ............ 56 CHAIRMAN OF VINCENT ENTERPRISES. Mr. Vincent has been a private
1993 investor at Vincent Enterprises since January 1, 1995. Prior to
that, Mr. Vincent served as the Commissioner of Major League
Baseball from September 1989 until September 1992, having served as
the Deputy Commissioner of Major League Baseball from April 1989.
Prior to that, he served as Executive Vice President of The
Coca-Cola Company, with responsibility for all of its entertainment
activities, from April 1986 until July 1988. He is also a director
of The Continental Corporation, Culbro Corporation and Oakwood
Homes Corporation. Mr. Vincent is an Unaffiliated Director.
DIRECTORS WHOSE TERMS EXPIRE IN 1997
Lawrence B. Buttenwieser ........... 63 PARTNER, ROSENMAN & COLIN. Mr. Buttenwieser served as a director of
1989 WCI from 1963 to 1990. Mr. Buttenwieser has been a partner at
Rosenman & Colin (attorneys) for more than the past five years. He
is also a director of General American Investors Company, Inc. Mr.
Buttenwieser is an Unaffiliated Director.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
David T. Kearns .................... 64 RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF XEROX CORPORATION.
1993 Mr. Kearns served as a Senior University Fellow at Harvard
University from August 1993 to March 1995 and served as Deputy
Secretary of the U.S. Department of Education from May 1991 until
January 1993. Prior to that, he served as Chairman of Xerox
Corporation from 1985 until May 1991, having served as its Chief
Executive Officer from 1982 to August 1990. He previously served as
a director of the Company from 1978 until May 1991 when he resigned
to accept his government appointment. He is also a director of The
Chase Manhattan Corporation and Ryder System, Inc. Mr. Kearns is an
Unaffiliated Director.
Gerald M. Levin .................... 55 CHAIRMAN OF THE BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER OF THE
1988 COMPANY. Mr. Levin became Chairman of the Board of Directors and
Chief Executive Officer of the Company on January 21, 1993, having
served as President and Co-Chief Executive Officer since February
20, 1992. Prior to that, Mr. Levin served as Vice Chairman of the
Board and Chief Operating Officer of the Company from May 1991,
having served as Vice Chairman of the Board of the Company from
July 1988. He previously served as a director of the Company from
1983 until January 1987. He is also a director of Turner
Broadcasting System, Inc. and a member of the Board of
Representatives of Time Warner Entertainment Company, L.P. Mr.
Levin is an Affiliated Director.
J. Richard Munro ................... 64 CHAIRMAN OF THE EXECUTIVE/FINANCE COMMITTEE OF THE BOARD OF DIRECTORS
1978 OF, AND ADVISOR TO, THE COMPANY. Mr. Munro became an advisor to the
Company in July 1994. He has served as the sole Chairman of the
Executive Committee of the Board of Directors of the Company since
May 1990 and in January 1993, the functions of the Executive
Committee and the Finance Committee were merged. Prior to May 1990,
Mr. Munro served as Co-Chairman of the Board of Directors and
Co-Chief Executive Officer of the Company from July 24, 1989. He is
also a director of Genentech, Inc., Kellogg Company, Kmart
Corporation and Mobil Corporation. Mr. Munro is an Affiliated
Director.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Richard D. Parsons ................. 46 PRESIDENT OF THE COMPANY. Mr. Parsons became President of the Company
1991 on February 1, 1995. Prior to that, Mr. Parsons served as the
Chairman of The Dime Savings Bank of New York, FSB ('DSB') from
January 1991 and Chief Executive Officer from July 1990. He was
President of DSB from July 1988 to June 1990. He served as a
director of American Television and Communications Corporation,
then an 82%-owned subsidiary of the Company, from 1989 until 1991
and is currently also a director of Dime Bancorp, Inc., the Federal
National Mortgage Association and Philip Morris Companies Inc. and
a member of the Board of Representatives of Time Warner
Entertainment Company, L.P. Mr. Parsons is an Affiliated Director.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors currently has designated five principal standing
committees. The Company believes that it is in the best interest of the
Company's stockholders that each of the Audit, Compensation and Nominating and
Governance Committees be composed of at least a majority of Unaffiliated
Directors. As noted below, each of such committees is composed entirely of
Unaffiliated Directors. The current members and functions of all the Board's
committees are as follows:
Audit Committee. The Audit Committee is composed entirely of Unaffiliated
Directors. Its members are Messrs. Buttenwieser (Chair), Kearns, Luce and Miles.
The functions of the Audit Committee, which met twice during 1994, include (i)
the review of the professional services and independence of the Company's
independent auditors and the scope of the annual external audit as recommended
by the independent auditors; (ii) the review, in consultation with the
independent auditors and the Company's chief internal auditor, of the plan and
results of the annual audit and the adequacy of the Company's internal
accounting controls; (iii) the review, in consultation with management and the
independent auditors, of the Company's annual financial statements and the
results of each external audit; and (iv) the review, in consultation with the
Company's independent auditors and the Company's principal financial officer and
principal accounting officer, of the auditing and accounting principles and
practices to be used in the preparation of the Company's financial statements.
The Audit Committee has authority to consider the qualification of the
Company's independent auditors and make recommendations to the Board of
Directors as to their selection, and review and resolve any differences of
opinion between such independent auditors and management relating to the
preparation of the annual financial statements.
Compensation Committee. The Compensation Committee is composed entirely of
Unaffiliated Directors. Its members are Mr. Finkelstein, Ambassador Hills and
Messrs. Mark (Chair), Troubh and Vincent. The Compensation Committee, which met
four times during 1994, has authority to engage independent compensation
consultants to assist the Committee in its review of the Company's executive
compensation. The Compensation Committee also has authority, as delegated by the
Board of Directors, to administer the Company's executive compensation plans.
8
<PAGE>
The Compensation Committee, after receiving and considering the recommendations
of the Company's Chief Executive Officer, determines the salaries and incentive
compensation (including the grant of stock options) and employment agreements of
the executive officers of the Company. See 'Compensation Committee Report on
Compensation of Executive Officers of the Company.'
Nominating and Governance Committee. The Nominating and Governance
Committee is composed entirely of Unaffiliated Directors. Its members are Mr.
Adelson, Mrs. Greenough and Messrs. Perkins (Chair) and Vincent. The Nominating
and Governance Committee, which met twice during 1994, has authority to review
the size and composition of the Board of Directors and recommends nominees to
serve on the Board of Directors and considers the qualification of candidates
for election as directors. Nominees to the Board of Directors are selected on
the basis of recognized achievements and their ability to bring various skills
and experience to the deliberations of the Board of Directors. In carrying out
its responsibilities, the Nominating and Governance Committee will consider
candidates recommended by other directors, employees and stockholders. Written
suggestions for nominees should be sent to the Secretary of the Company.
The Company's By-laws provide that any stockholder of record who is
entitled to vote for the election of directors may nominate persons for election
as directors only if timely written notice in proper form of the intent to make
a nomination at a meeting of stockholders is received by the Secretary of Time
Warner at 75 Rockefeller Plaza, New York, NY 10019. To be timely and in proper
form under the By-laws, the notice generally must be delivered not less than 60
nor more than 90 days prior to the date of the meeting at which directors are to
be elected and must contain prescribed information about the proponent and each
nominee, including such information about each nominee as would have been
required to be included in a proxy statement filed pursuant to the rules of the
Securities and Exchange Commission had such nominee been nominated by the Board
of Directors.
Editorial Committee. The Editorial Committee is composed of all of the
directors except for Messrs. Levin and Parsons and Mr. Luce serves as its
chairman. The Editorial Committee, which met once in 1994, has authority to
review with the Company's editor-in-chief significant editorial developments and
plans affecting the Company's magazines, editorial personnel policies, major
editorial staffing matters and policies and procedures regarding journalistic
standards and accuracy. The Company's editor-in-chief, in consultation with the
Editorial Committee, makes recommendations to the Board of Directors regarding
the election of a successor editor-in-chief.
Executive/Finance Committee. The members of the Executive/Finance Committee
are Messrs. Adelson, Finkelstein, Mrs. Greenough and Messrs. Levin, Munro
(Chair), Parsons, Perkins and Troubh. The Executive/Finance Committee did not
meet during 1994 but took action by written consent on six occasions. The
Executive/Finance Committee may exercise all the authority of the Board of
Directors in the management of the business and affairs of the Company, except
for matters related to the composition of the Board of Directors and its
committees, changes in the By-laws, changes in matters specifically delegated to
other committees and certain other significant corporate matters.
During 1994, the Board of Directors met eight times and no incumbent
director attended fewer than 75% of the total number of meetings of the Board of
Directors and the committees of which he or she was a member.
DIRECTOR COMPENSATION
Directors who are not officers or employees of the Company or any of its
subsidiaries ('Eligible Directors') currently receive $60,000 as an annual
retainer, half of which is paid in cash
9
<PAGE>
and the remaining half in shares of Common Stock under the 1988 Restricted Stock
Plan for Non-Employee Directors (the 'Directors' Stock Plan'). In addition, a
fee of $2,500 is paid for attendance at each special Board meeting and $1,000 is
paid for attendance at each committee meeting not held in conjunction with a
Board meeting. Committee chairmen do not receive additional compensation.
Eligible Directors are also reimbursed for expenses incurred in attending Board
and committee meetings, including those for travel, food and lodging.
Directors who are officers of or employed by the Company or any of its
subsidiaries are not additionally compensated for their Board and committee
activities.
Under the Directors' Stock Plan, which was approved by stockholders of the
Company, each Eligible Director is generally issued an annual grant of shares of
Common Stock ('Restricted Shares') having a market value of $30,000. During the
restriction period provided under the Directors' Stock Plan (the 'Restriction
Period'), the Eligible Director has the right to vote his or her Restricted
Shares, to receive and retain all regular cash dividends, and to exercise all
other rights as a holder of Common Stock, but may not dispose of the Restricted
Shares, and the Company retains custody of the stock certificates and all
distributions other than regular cash dividends.
The Restriction Period ends, and all Restricted Shares (including any
distributions retained by the Company) become vested, upon the termination of
the Eligible Director's service on the Board of Directors on account of (i)
mandatory retirement; (ii) failure to be reelected by stockholders; or (iii)
death or disability. In addition, the Restriction Period ends in the event of a
purchase of shares pursuant to a tender offer or certain other transactions and,
with the approval of the Board on a case by case basis, under certain other
designated circumstances. If an Eligible Director leaves the Board of Directors
for any reason other than as set forth above, then all Restricted Shares issued
to such Eligible Director are forfeited to the Company. In 1994, each Eligible
Director received 779 Restricted Shares under the Directors' Stock Plan.
The Company also has a deferred compensation plan for Eligible Directors.
Under this plan, Eligible Directors may elect each year to defer payment of 25%,
50%, 75% or 100% of their cash compensation payable during the next calendar
year. Amounts deferred under the plan are increased based on an interest factor
or the hypothetical investment in shares of Common Stock and dividends thereon,
with the higher valuation used to determine the amount paid upon distribution.
Amounts deferred are payable in a lump-sum or in installments, generally upon
attainment of age 70 or cessation of service as a director of the Company for
certain enumerated reasons.
The Company also maintains a retirement plan for its Eligible Directors who
have served as such for at least three years. Under this plan, each such
Eligible Director will receive an annual retirement benefit commencing after the
later of stepping down from the Board of Directors or attaining age 60 (or
earlier in the event such Eligible Director becomes disabled), equal to one-half
of the value of the annual retainer (including cash and Restricted Shares)
payable on the last day that the Eligible Director served on the Board of
Directors, which benefit will be paid for the number of years of service as an
Eligible Director. Service as an outside director of WCI prior to July 24, 1989
is considered credited service under this plan. In the event an Eligible
Director dies prior to the commencement or completion of payment of benefits
under the retirement plan, a lump-sum cash payment will be made in an amount
equal to the total benefits or remaining benefits the Eligible Director would
have been entitled to receive had he or she not died. The Chief Executive
Officer of the Company may accelerate payment of the annual retirement benefit
accrued to an Eligible Director under the plan.
10
<PAGE>
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth as of February 1, 1995 (except as noted) for
each current director, each nominee for election as a director, each of the
executive officers named in the Summary Compensation Table below and for all
current directors and executive officers as a group, information concerning the
beneficial ownership of Common Stock and the Company's 8 3/4% Convertible
Subordinated Debentures due 2015 (the '8 3/4% Debentures'), which are
convertible into Common Stock.
As of February 1, 1995, the approximate aggregate market value of the
Common Stock and 8 3/4% Debentures held by certain persons as set forth in the
table below (exclusive of shares subject to stock options) was as follows: 12
current Unaffiliated Directors -- $245 million; and all current
directors -- $272 million. In addition, as of December 31, 1994, the trusts
maintained pursuant to the Company's qualified employee benefit plans, other
than pension plans, held Common Stock and 8 3/4% Debentures valued at
approximately $662 million in accounts for the benefit of employees of the
Company and its subsidiaries.
<TABLE>
<CAPTION>
SECURITIES BENEFICIALLY OWNED(1)
--------------------------------------------------------------------
TITLE OF NUMBER OF SHARES OR OPTION PERCENT
NAME SECURITY PRINCIPAL AMOUNT(2) SHARES(3) OF CLASS
---------------------------------------- ---------------------- ------------------- --------- --------
<S> <C> <C> <C> <C>
Merv Adelson............................ Common 360,213 348,848 *
8 3/4% Debentures $ 8,450,850 *
Lawrence B. Buttenwieser (4)............ Common 75,533 -- *
8 3/4% Debentures $ 489,650 *
Edward S. Finkelstein................... Common 8,141 -- *
Beverly Sills Greenough (5)............. Common 20,553 -- *
8 3/4% Debentures $ 40,000 *
Peter R. Haje (10)...................... Common 9,158 661,954 *
8 3/4% Debentures $ 39,000 *
Carla A. Hills (10)..................... Common 2,253 -- *
Geoffrey W. Holmes (10)................. Common 44,296 468,212 *
8 3/4% Debentures $ 1,086,750 *
Tod R. Hullin (10)...................... Common 1,713 243,058 *
David T. Kearns......................... Common 1,953 -- *
Gerald M. Levin (10).................... Common 365,151 2,200,268 *
Henry Luce III (6)...................... Common 5,892,792 -- 1.6%
8 3/4% Debentures $ 5,495,000 *
Reuben Mark............................. Common 9,653 -- *
Michael A. Miles (7).................... Common 3,500 -- *
J. Richard Munro (8)(10)................ Common 381,981 442,556 *
Richard D. Parsons...................... Common 5,213 -- *
Donald S. Perkins....................... Common 13,318 -- *
Raymond S. Troubh (9)................... Common 8,713 -- *
8 3/4% Debentures $ 315,350 *
Francis T. Vincent, Jr.................. Common 11,653 -- *
Bert W. Wasserman (11).................. Common 75,939 980,772 *
8 3/4% Debentures $ 399,700 *
All current directors and executive Common 7,239,598 4,392,581 3.1%
officers (20 persons) as a group 8 3/4% Debentures $14,856,850 *
(4)-(10)..............................
</TABLE>
------------
* Represents beneficial ownership of less than one percent of issued and
outstanding stock on February 1, 1995.
(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the 'Exchange Act'). Unless otherwise indicated, beneficial
ownership
(footnotes continued on next page)
11
<PAGE>
(footnotes continued from previous page)
includes both sole voting and sole investment power. This table does not
include, unless otherwise indicated, any shares of Common Stock or other
equity securities of the Company which may be held by pension and
profit-sharing plans of other corporations or endowment funds of
educational and charitable institutions for which various directors and
officers serve as directors or trustees. The shares of Common Stock held by
certain subsidiaries of the Company, which are not entitled to be voted at
the Annual Meeting, are excluded for purposes of calculating the Percent of
Class. As of February 1, 1995, none of the named persons or group
beneficially owns any of the Company's Series B 6.40% Preferred Stock or
Liquid Yield Option'tm' Notes due 2013.
(2) Excludes shares of Common Stock issuable upon conversion of the 8 3/4%
Debentures. Each $47.73 principal amount of 8 3/4% Debentures is currently
convertible into one share of Common Stock. Shares of Common Stock issuable
upon conversion of the 8 3/4% Debentures are included in the 'Percent of
Class' calculation pursuant to Rule 13d-3 under the Exchange Act.
(3) Reflects shares of Common Stock subject to options to purchase Common Stock
issued by the Company which, on February 1, 1995, were unexercised but were
exercisable within a period of 60 days from that date. These shares are
excluded from the column headed 'Number of Shares.'
(4) Includes 1,280 shares of Common Stock owned of record and beneficially by
Mr. Buttenwieser's wife and 22,656 shares of Common Stock held of record by
a trust of which Mr. Buttenwieser and others are trustees in which Mr.
Buttenwieser has no beneficial interest and as to all of which Mr.
Buttenwieser disclaims any beneficial ownership.
(5) Includes 10,240 shares of Common Stock held by a trust of which Mrs.
Greenough is the beneficiary but as to which she has no voting or
investment power.
(6) Includes 215,004 shares of Common Stock held by a trust of which Mr. Luce
is sole trustee, an aggregate of 710,608 shares of Common Stock held by
various trusts of which Mr. Luce is a co-trustee and 4,636,072 shares of
Common Stock and $5,495,000 principal amount of 8 3/4% Debentures
beneficially owned by The Henry Luce Foundation, Inc., of which Mr. Luce is
one of twelve members and twelve directors.
(7) Mr. Miles purchased these shares on February 10, 1995.
(8) Includes 35,830 shares of Common Stock held of record and beneficially by
members of Mr. Munro's family, as to which Mr. Munro disclaims any
beneficial ownership.
(9) Includes 3,200 shares of Common Stock held beneficially by Mr. Troubh's
wife, as to which Mr. Troubh disclaims any beneficial ownership.
(10) Includes an aggregate of approximately 49,600 shares of Common Stock held
by two trusts under employee stock plans of the Company for the benefit of
current directors and executive officers of the Company (including 2,670
shares for Mr. Haje, 1,713 shares for Mr. Hullin, 10,004 shares for Mr.
Levin and 17,961 shares for Mr. Munro) and an aggregate of 55,710 shares of
Common Stock beneficially owned by certain relatives of such persons. In
addition, Mr. Holmes beneficially owns 4,296 shares of Common Stock through
two trusts under employee benefit plans.
(11) Includes $2,700 principal amount of 8 3/4% Debentures held of record by a
partnership of which Mr. Wasserman is a general partner and 4,471 shares of
Common Stock held by two trusts under employee stock plans for Mr.
Wasserman's benefit.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is the name, address and stock ownership of each person or
group of persons known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES OF COMMON STOCK PERCENT OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(1)
--------------------------------------------------------------------- ---------------------- -----------------
<S> <C> <C>
The Capital Group Companies, Inc. .................................. 34,560,380(2) 9.09% (2)
333 South Hope Street
Los Angeles, California 90071
The Seagram Company Ltd. ........................................... 56,763,349(3) 14.95% (3)
1430 Peel Street
Montreal, Quebec, Canada H3A 1S9
</TABLE>
------------
(1) The shares of Common Stock held by certain subsidiaries of the Company,
which are not entitled to be voted at the Annual Meeting, are excluded for
purposes of calculating the 'Percent of Class.'
(2) Beneficial ownership is as of December 31, 1994. The Capital Group
Companies, Inc., a holding company, has filed with the Securities and
Exchange Commission a statement on Schedule 13G dated February 8, 1995 to
the effect that it (directly or indirectly) has sole dispositive power over
all these shares, that it has sole voting power over 7,260,800 of these
shares and that these shares are held principally by Capital Research and
Management Company, an investment adviser, and Capital Guardian Trust
Company, a bank. The Capital Group Companies, Inc. has advised the Company
(footnotes continued on next page)
12
<PAGE>
(footnotes continued from previous page)
that the shares of Common Stock reported as beneficially owned assumes the
conversion of convertible securities, that all of the reported shares are
held for the benefit of its clients and that it and each of its subsidiary
investment management companies acts separately in exercising investment
discretion over its managed accounts.
(3) Beneficial ownership and 'Percent of Class' are as of February 28, 1995. The
Seagram Company Ltd. has filed with the Securities and Exchange Commission
Amendment No. 7, dated April 13, 1994, to its statement on Schedule 13D and
a statement of Changes in Beneficial Ownership on Form 4 dated May 9, 1994
to the effect that it indirectly through its indirect wholly owned
subsidiary, Seagram Inc., has sole voting and sole dispositive power over
all these shares.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON COMPENSATION OF EXECUTIVE OFFICERS OF THE
COMPANY
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
The Company's executive compensation programs are designed with a
particular emphasis on motivating the executives to continue to achieve the
Company's business objectives, including increasing stockholder value. Each of
the Company's executive officers was in 1994, and is currently, employed
pursuant to a multi-year employment agreement, the purpose of which is to retain
the services of such officer for an extended period. The minimum salary to which
each executive officer is entitled is specified in the employment agreement, but
the annual bonus, which is a major part of an executive officer's cash
compensation, and awards of stock options for executive officers are approved by
the Compensation Committee of the Board of Directors of the Company, which is
comprised entirely of Unaffiliated Directors. The principal terms of the
employment agreements of certain executive officers are described under
'Employment Arrangements.'
The Company believes that it is in the best interest of its stockholders
that its executive officers be compensated in a manner that provides such
officers with a strong incentive to advance both the short-term and long-term
interests of the Company's stockholders. The Company's current compensation
strategy is designed to maintain a high proportion of pay at risk in the form of
a variable annual incentive bonus (which permits individual performance to be
appropriately recognized on an annual basis) and stock-based compensation (which
permits a meaningful portion of the executive's long-term rewards to coincide
with long-term stock price appreciation recognizable by the stockholders). To
this end, the Company's remuneration programs for its executive officers award
annual performance bonuses and, when appropriate, stock options. The
Compensation Committee takes into account the total compensation from all
sources provided to the individual by the Company, including deferred
compensation, savings and retirement plans and insurance and other benefits. As
discussed elsewhere in this Proxy Statement, the Company has proposed for
stockholder approval an annual bonus plan for the Chief Executive Officer and
certain other executive officers of the Company that the Company expects will
qualify the compensation paid to them under this plan for income tax
deductibility under section 162(m) of the Internal Revenue Code of 1986, as
amended.
In addition, because of the restrictions on tax deductibility imposed by
such section 162(m), the Company has adopted a general policy, commencing for
1994, of awarding stock options to its executive officers only pursuant to plans
that the Company expects will satisfy the requirements of section 162(m). In
addition, in 1994 the Company did not, and for 1995 the Company does not expect
to, pay the named executive officers cash compensation in excess of the section
162(m) deductibility limit because of individual executive officers'
compensation deferral arrangements, the effect of 'grandfathering' provisions of
the tax laws, the stockholder approval of the Annual Bonus Plan for the Chief
Executive Officer or the anticipated stockholder approval at the Annual Meeting
of the amended and restated Annual Bonus Plan for Executive Officers described
elsewhere in this Proxy Statement. The Company's Board of Directors, or the
Compensation
13
<PAGE>
Committee, however, retains discretion to authorize the payment of other
compensation that does not qualify for income tax deductibility under section
162(m).
During 1994, several of the Company's executive officers were awarded stock
options. These awards were made after a review of the exercise prices, numbers
and dates of the awards of those options already held by the executive officers
of the Company and a comparison to those held by other members of the Company's
senior management. Although there are no particular targets with respect to
executive officers' holdings of stock options, the Compensation Committee
believes that the higher the level of an executive's responsibilities, the
larger the stock-based component of his compensation should be.
The Chief Executive Officer reviewed executive performance with and
recommended to the Compensation Committee the amount of each other executive
officer's annual incentive bonus and stock option award, if any. These variable
elements in the compensation of the Company's executive officers recognize
individual contributions and are determined based upon the level of the
executive's responsibilities, the efficiency and effectiveness with which he
marshals resources and oversees the matters under his supervision, the degree to
which he has contributed to the accomplishment of major tasks that advance the
Company's goals and succession arrangements. In light of the nature of their
responsibilities, particularly the fact that these officers have overall
corporate policy-making and administrative responsibilities and do not directly
oversee principal operating units of the Company, the Compensation Committee's
assessment may not be based directly on corporate performance from a financial
standpoint but relate generally to the accomplishment of the Company's goals as
a whole. However, the Company's financial performance is a key factor that
affects the overall level of compensation for all executive officers.
In 1994, the Company took important strides toward its major strategic
goals for the year and achieved its major financial goals on a Company-wide
basis and, in significant part, achieved such goals at its operating levels.
These achievements included: significantly advancing its cable clustering
strategy through the Summit Communications Group, Inc. and Advance Publications,
Inc./Newhouse Broadcasting Corporation agreements; developing and solidifying
the strength of corporate and divisional management by promoting and recruiting
qualified executives and entering into long-term agreements with certain current
executives; establishing numerous international expansions; beginning the
expansion of its cable operations into telephony; demonstrating the
technological feasibility of the Full Service Network'tm' with its launch in
Orlando, Florida; showing its ability to support the Full Service Network and
other interactive and video media and to increase profitability by identifying
and developing potential expansions and extrapolations of products of the
Company's operating divisions into those realms; the development of The WB, a
new television network launched in January 1995; exerting high level impact on
technological and policy standards for the 'information super highway;'
maintaining effective communications about the Company's business strategies
with its various constituencies, as well as various governmental bodies on
legislative and regulatory initiatives; and making improvements in the Company's
corporate governance policies. These accomplishments and the Company's
performance as a whole had a significant impact on the assessment of the annual
incentive bonus compensation for all of the Company's executive officers.
The level of Mr. Levin's 1994 annual incentive bonus as Chairman of the
Board and Chief Executive Officer was based on a determination of the
Compensation Committee, the starting point of which was the calculation of the
maximum bonus payable pursuant to the stockholder-approved Annual Bonus Plan for
Mr. Levin, which is expected to permit the Company a federal income tax
deduction for any bonus paid pursuant to such Plan. Such calculation was based
on a percentage of the amount by which the Company's EBITDA (as defined) for
1994 exceeded the Company's average EBITDA for the preceding three years and
resulted in a maximum deductible annual bonus equal to $4.9 million. In
addition, for 1994, both strategic, non-financial and additional financial goals
were established for Mr. Levin and were used to examine his
14
<PAGE>
performance and determine the amount of his bonus compensation within the Plan's
parameters. Operational targets were established based on divisional and
Company-wide earnings before interest, taxes, depreciation and amortization
('EBITDA') and on cash flow. Mr. Levin's qualitative goals included creating new
revenue streams by extrapolating existing franchises at each of the Company's
operating divisions, playing an effective role in the public debate concerning
government policy and technological standards relating to the 'information super
highway' and the Full Service Network, strengthening and developing the skills
and depth of senior management at the Company and at its operating divisions,
continuing to enhance the Company's reputation among its major constituencies as
a solid, socially progressive and strategically oriented company and
establishing a good record on corporate governance issues. The Committee's
evaluation also took into account the performance of the Company's Common Stock
during the year, giving appropriate recognition, in its view, to the effects of
general market conditions, external influences thereon and efforts made by
management to impact market performance positively.
The total compensation opportunity for Mr. Levin was reviewed in the
context of the Bonus Plan maximum and total compensation packages awarded to
chief executive officers at selected public companies with broad consumer
product, entertainment and media orientations. In light of Mr. Levin's
achievement of a high level of performance, as reflected in the Company's
accomplishments discussed above, the Compensation Committee placed his total
cash compensation for the year in the upper quartile of such compensation paid
to the comparison group. The companies included in this comparison are for the
most part not the same as the companies included in the peer group index in the
graph showing the comparison of five-year cumulative total stock returns shown
elsewhere in this Proxy Statement. The Compensation Committee believes that the
Company's most direct competitors for executive talent are composed of a broader
class than the companies with which the Company would be compared for stock
performance purposes. The Compensation Committee considered the decline in the
Company's Common Stock price during the year and acknowledged that the
performance of the Common Stock had a significant impact on the long-term,
stock-based components of Mr. Levin's compensation. Mr. Levin's bonus level was
based on the Compensation Committee's review of Mr. Levin's accomplishment of
his goals and reflects the Committee's positive evaluation of his stewardship of
the Company's significant accomplishments during 1994, despite particularly
difficult regulatory, strategic and market environments, and his favorable
positioning of the Company, its management, product lines and services for the
future.
As discussed above, the Compensation Committee considers a variety of
factors in arriving at the compensation paid to the Company's executive
officers. No specific weighting was assigned by the Compensation Committee or
the Board to any of the factors considered in determining the remuneration paid
to Mr. Levin or the other executive officers for 1994.
Members of the Compensation Committee
Reuben Mark (Chairman)
Edward S. Finkelstein
Carla A. Hills
Raymond S. Troubh
Francis T. Vincent, Jr.
15
<PAGE>
EXECUTIVE COMPENSATION SUMMARY TABLE
The following table sets forth information concerning total compensation
paid to the Chief Executive Officer and each of the four most highly compensated
executive officers of the Company who served in such capacities on December 31,
1994 (the 'named executive officers') for services rendered to the Company
during each of the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION(5) COMPENSATION(6)
----------------------------------------- --------------- ---------------
OTHER SECURITIES
NAME AND PRINCIPAL ANNUAL UNDERLYING
POSITION IN 1994 YEAR SALARY(3) BONUS COMPENSATION(4) OPTIONS AWARDED
---------------------------- ---- ---------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gerald M. Levin ............ 1994 $1,050,000 $4,000,000 $ 130,390 -- $150,667
Chairman of the Board and 1993 1,050,000 4,000,000 104,000 1,000,000 139,784
Chief Executive Officer 1992 1,050,000 2,500,000 100,600 -- 150,143
(1)
Peter R. Haje .............. 1994 $ 675,000 $ 975,000 $ 51,500 -- $129,377
Executive Vice President 1993 675,000 1,100,000 -- 50,000 119,391
and General Counsel 1992 675,000 975,000 51,000 -- 129,532
Bert W. Wasserman .......... 1994 $ 825,000 $1,100,000 $ 86,412 -- $149,113
Executive Vice President 1993 675,000 1,100,000 67,500 50,000 136,699
and Chief Financial 1992 675,000 1,000,000 76,000 -- 147,505
Officer
Geoffrey W. Holmes ......... 1994 $ 525,000 $ 600,000 -- 40,000 $ 58,556
Senior Vice President, 1993 525,000 750,000 -- -- 54,551
Technology (2) 1992 525,000 700,000 -- 200,000 38,498
Tod R. Hullin .............. 1994 $ 487,500 $ 550,000 -- 40,000 $ 75,344
Senior Vice President -- 1993 406,250 550,000 -- 30,000 20,867
Communications and Public 1992 406,250 500,000 -- -- 20,309
Affairs
</TABLE>
------------
(1) Mr. Levin became Chairman of the Board and Chief Executive Officer on
January 21, 1993, having served as President and Co-Chief Executive Officer
from February 20, 1992, and Vice Chairman of the Board and Chief Operating
Officer prior to that.
(2) Mr. Holmes became Senior Vice President, Technology on January 21, 1993,
having served as a Senior Vice President prior to that.
(3) Amounts shown in the table include credits to each named executive officer's
deferred compensation account equal to one third of the total shown under
the 'salary' column for each of 1994, 1993 and 1992, except that the credits
to Mr. Hullin's account for each of 1993 and 1992 were $81,250.
(4) In accordance with rules of the Securities and Exchange Commission, amounts
totalling less than $50,000 have been omitted. The amounts of personal
benefits shown in this column for 1994 that represent more than 25% of the
applicable executive's total Other Annual Compensation include financial
services of $80,000 to Mr. Levin, $27,500 to Mr. Haje and $70,000 to Mr.
Wasserman and a $24,000 automobile allowance to Mr. Haje.
(5) None of the options indicated was awarded with tandem stock appreciation
rights. No restricted stock was granted to the above-named executive
officers during 1992, 1993 or 1994 and none of such executive officers, as
of December 31, 1994, held any restricted stock.
(6) The amounts shown in this column for 1994 include the following:
(a) Pursuant to the Time Warner Employees' Savings Plan, a defined
contribution plan established under section 401(k) of the Internal Revenue
Code of 1986, as amended (the 'Code'), available generally to employees of
the Company, in 1994, each executive named above deferred a portion of his
annual compensation and the Company contributed $2,000 for the first $3,000
so deferred by the executive ('Matching Contribution'). These Matching
Contributions were invested in a fund maintained under the plan trust
primarily invested in Common Stock.
(b) Pursuant to the Time Warner Employees' Stock Ownership Plan
('TESOP'), a defined contribution plan available generally to employees of
the Company, the Company may make annual contributions to a trust for the
benefit of eligible employees of the Company in amounts approved by the
Board of Directors in its discretion, but not to exceed 12% of total
eligible compensation. For the 1994 plan year, the Company allocated to each
participant's account in the trust established under TESOP 8% of total
eligible compensation of each eligible employee of the Company, including
$12,000 for the account of each executive named above. The Company's
contribution may be made in shares of Common Stock and/or in cash which will
be used to acquire shares of Common Stock. Because Internal Revenue Service
regulations have limited the amount of eligible compensation under TESOP to
$150,000, the Company has adopted a
(footnotes continued on next page)
16
<PAGE>
(footnotes continued from previous page)
non-qualified 'supplemental' TESOP covering eligible compensation between
$150,000 and $250,000 in 1994 (increased 5% per year thereafter, to a
maximum of $350,000). The Company's contribution to this supplemental plan,
$8,000 in 1994 for each named executive officer, is maintained pursuant to
an unfunded, non-qualified deferred compensation plan and is deemed to earn
interest at the long-term applicable federal rate as announced monthly by
the Internal Revenue Service, compounded daily.
(c) The Company maintains a program of life and disability insurance
which is generally available to all salaried employees on the same basis. In
addition, during 1994, the Company maintained for certain members of senior
management, including Messrs. Levin, Haje, Wasserman and Holmes, certain
supplemental life insurance benefits. For 1994, the Company paid premiums
for this supplemental coverage of approximately $150 for each of Messrs.
Levin and Haje, $1,079 for Mr. Holmes and $12,054 for Mr. Wasserman. The
Company also maintained split-dollar life insurance policies on the lives of
the named executive officers and paid the following amounts allocated to the
term portion of the split-dollar coverage for 1994: Mr. Levin, $11,119; Mr.
Haje, $11,651; Mr. Wasserman, $17,912; Mr. Holmes, $1,098; and Mr. Hullin,
$2,501. Mr. Holmes also reimbursed the Company for part of this portion of
the insurance coverage. The actuarial equivalent of the value of the
premiums paid by the Company for 1994 based on certain assumptions regarding
interest rates and periods of coverage are: Mr. Levin, $128,517; Mr. Haje,
$107,227; Mr. Wasserman, $115,059; Mr. Holmes, $35,477; and Mr. Hullin
$53,344. It is anticipated that the Company will recover the net after-tax
cost of the premiums on these policies or the cash surrender value thereof.
For a description of life insurance coverage for certain executive officers
and directors provided pursuant to the terms of their employment agreements,
see 'Employment Arrangements.'
STOCK OPTION GRANTS DURING 1994
The following table sets forth certain information with respect to employee
options to purchase shares of Common Stock ('options') awarded during 1994 to
the named executive officers. All such options were nonqualified options and no
stock appreciation rights ('SARs') alone or in tandem with stock options were
awarded in 1994.
STOCK OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-------------------------------------------------
PERCENT
OF TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS VALUE AT ASSUMED ANNUAL
SECURITIES GRANTED EXERCISE RATES OF STOCK PRICE
UNDERLYING TO OR BASE APPRECIATION FOR OPTION TERM
OPTIONS EMPLOYEES PRICE EXPIRATION --------------------------------------------
NAME GRANTED IN 1994 ($/sh) DATE 0%($) 5%($) 10%($)
------------------------------- ---------- --------- -------- ---------- ----- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald M. Levin................ -- -- -- -- -- -- --
Peter R. Haje.................. -- -- -- -- -- -- --
Bert W. Wasserman.............. -- -- -- -- -- -- --
Geoffrey W. Holmes............. 40,000 .66% $40.56 3/15/04 0 $1,022,112 $2,579,616
Tod R. Hullin.................. 40,000 .66 40.56 3/15/04 0 1,022,112 2,579,616
</TABLE>
------------
(1) Options for executive officers are generally awarded pursuant to plans
approved by the Company's stockholders and the terms are governed by the
plans and the recipient's option agreement. The option exercise price is the
fair market value of the Common Stock on the date of grant. The options
awarded in 1994 to the named executive officers become exercisable in
installments of one-third on the first three anniversaries of the date of
grant. Payment of the exercise price of an option may be made in cash or, in
whole or in part, in full shares of Common Stock already owned by the holder
of the option. The payment of withholding taxes due upon exercise of an
option may generally be made with shares of Common Stock.
As required by rules of the Securities and Exchange Commission, the dollar
amounts in the last two columns represent the hypothetical gain or 'option
spread' that would exist for the options based on assumed 5% and 10% annual
compounded rates of stock price appreciation over the full ten-year option term
(resulting in 63% and 159% appreciation, respectively). These assumed rates of
appreciation applied to the price on the date of the awards would result in a
Common Stock price on March 15, 2004 of $66.11 and $105.05, respectively. If
these price appreciation assumptions are applied to all of the Company's
currently outstanding Common Stock, such Common Stock would appreciate in the
aggregate by approximately $9.7 billion and $24 billion, respectively, over the
ten-year period ending on March 15, 2004. These prescribed rates are not
intended to forecast possible future appreciation, if any, of the Common Stock.
17
<PAGE>
OPTION EXERCISES AND VALUES IN 1994
The following table sets forth as to each of the named executive officers
information with respect to option exercises during 1994 and the status of their
options on December 31, 1994: (i) the number of shares of Common Stock
underlying options exercised during 1994; (ii) the aggregate dollar value
realized upon exercise of such options; (iii) the total number of shares of
Common Stock underlying exercisable and nonexercisable stock options held on
December 31, 1994; and (iv) the aggregate dollar value of in-the-money
exercisable and nonexercisable stock options on December 31, 1994.
AGGREGATE OPTION EXERCISES DURING 1994
AND
OPTION VALUES ON DECEMBER 31, 1994
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES DOLLAR VALUE OF
SHARES DOLLAR UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
UNDERLYING VALUE OPTIONS ON 12/31/94 OPTIONS ON 12/31/94*
OPTIONS REALIZED ----------------------------- -----------------------------
NAME EXERCISED ON EXERCISE EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
-------------------------- ---------- ----------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Gerald M. Levin (1)....... -- -- 1,866,935 666,665 $18,694,468 $978,332
Peter R. Haje............. -- -- 645,287 33,333 $10,387,909 $ 12,500
Bert W. Wasserman......... -- -- 947,439 33,333 $ 2,913,250 $ 12,500
Geoffrey W. Holmes........ -- -- 454,878 106,666 $ 1,229,654 $492,995
Tod R. Hullin............. -- -- 219,724 60,000 $ 3,029,458 $ 7,500
</TABLE>
------------
* Based on a closing price of $35.125 per share on December 30, 1994 as
reported on the New York Stock Exchange Composite Listing.
(1) Mr. Levin is the only executive officer listed above who has been awarded
SARs in tandem with any of his stock options. 313,600 of his options held on
December 31, 1994 were awarded with tandem SARs and they all were awarded on
or prior to September 22, 1989; and they are all currently exercisable and,
at December 31, 1994, had a value of $2,168,400, but no separate value has
been attributed to these SARs. These SARs are exercisable for Common Stock
or cash, subject to a $250,000 limit on the amount of cash that may be
received upon their exercise.
The option exercise price of all the options held by the named executive
officers is the fair market value of the Common Stock on the date of grant
except for 500,000 of Mr. Levin's options, awarded in 1993, half of which was
awarded at an exercise price 25% and 50%, respectively, above the fair market
value of the Common Stock on the date of grant. All such options become
immediately exercisable in full upon the occurrence of certain events, including
the death or total disability of the option holder, certain change-of-control
transactions and, in most cases, the Company's breach of the holder's employment
agreement.
The options held by executive officers remain exercisable for the full term
of their employment agreements in the event their employment terminates as a
result of the Company's breach. For some executive officers, their options
remain exercisable for the full term of the options if their employment is
terminated for any reason other than for cause, including death. Otherwise,
options may generally be exercised for one year after death or total disability.
All options terminate immediately if the holder's employment is terminated for
cause. The terms of the options shown in the chart are generally ten years,
although 320,000 options held by Mr. Levin have a term of 15 years from the date
of award.
EMPLOYMENT ARRANGEMENTS
The Company is, or during 1994 was, a party to employment agreements with
the executive officers and certain directors of the Company. These agreements
have been filed with the Securities and Exchange Commission as exhibits to the
Company's periodic filings.
Employment Agreements of the Named Executive Officers
Among other things, the agreements with the Company's executive officers
typically provide for: a fixed term of employment in a specified executive post;
annual salary; deferred compensation, generally equal to 50% of annual salary,
which is invested and paid out as described below under 'Deferred Compensation;'
an annual bonus in the discretion of the Board of
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<PAGE>
Directors or its Compensation Committee, all or a portion of which may be
deferred at the election of the executive officer; and life insurance provisions
generally providing for or contemplating split dollar policies, generally for
the life of the executive and pursuant to which the Company recovers an amount
equal to the net after-tax cost to the Company of the premiums on such policy or
the cash surrender value thereof, as well as any group life insurance generally
provided by the Company to its employees.
Generally, such agreements include a narrow definition of the 'cause' for
which an executive's employment may be terminated and in that event, the
executive will only receive earned and unpaid base salary and deferred
compensation accrued through such date of termination.
These agreements typically provide that in the event of the Company's
material breach or wrongful termination of an executive's employment, the
executive will be entitled to elect either (a) to receive a lump-sum payment
equal to the present value of the base salary, projected bonuses and deferred
compensation otherwise payable during the remaining portion of the executive's
term of employment or (b) to remain an employee of the Company through the end
of the term of employment and, without performing any services, receive the base
salary, bonuses and deferred compensation payable as if there had been no breach
or wrongful termination. Executives are not generally required to mitigate
damages after such a termination, other than as necessary to prevent the Company
from losing any tax deductions that it otherwise would have been entitled to
receive for any payments deemed to be 'contingent on a change' under the Code.
In addition, these agreements typically provide that if an executive thereafter
obtains other employment, the total cash salary and bonus received therefrom for
services prior to the expiration of the executive's employment term (up to the
amount of compensation paid to the executive by the Company for such period)
must be paid over to the Company as received.
In the event Mr. Hullin's employment terminates as a result of the
Company's material breach or wrongful termination or the Company terminates his
employment after the term of his employment agreement, Mr. Hullin is entitled to
a minimum severance payment equal to the present value of three times the sum of
his annual base salary, projected bonus and deferred compensation. In addition,
the provisions of Mr. Hullin's employment agreement relating to mitigation of
damages provide that he may retain and not pay over to the Company an amount
equal to the severance he would have received in accordance with the Company's
personnel policies if he had been job eliminated.
If an executive becomes disabled during the term of his employment
agreement the executive typically will receive full salary, bonus and deferred
compensation for six months and 75% thereof through the end of the employment
term or, in some cases, for three years, if longer. Deferred compensation will
be maintained and paid after giving effect to the executive's base salary after
disability. Any such payments will be reduced by amounts received from Worker's
Compensation, Social Security and disability insurance policies maintained by
the Company.
If an executive dies during the term of an employment agreement, generally
the executive's beneficiaries will receive the executive's earned and unpaid
salary and deferred compensation to the last day of the month in which the death
occurs and a pro rata portion of the executive's bonus for the year of his
death.
The minimum annual salaries and deferred compensation under these
agreements for the executive officers listed in the Summary Compensation Table
are as shown for 1994 in that Table. The expiration dates of these agreements
and the amounts of the individual life insurance coverage for the lifetime of
such persons are: Mr. Levin -- January 10, 2000 and $6 million; Mr.
Haje -- December 31, 1995 and $4 million; Mr. Holmes -- December 31, 1995 and $2
million; and Mr. Hullin -- December 31, 1998 and $2 million. Effective January
1, 1995, Mr. Wasserman ceased to be an executive officer of the Company. Mr.
Wasserman's pre-existing agreement with the Company provided for a term of
employment through December 31, 1997 with an advisory arrangement for three
years thereafter at $400,000 per year. It also provided for a salary increase
19
<PAGE>
to $650,000 per year on July 1, 1995 and $5.5 million of life insurance coverage
for his lifetime. The Company remains obligated to pay Mr. Wasserman
substantially in accordance with the terms of that agreement. In addition, all
of Mr. Wasserman's stock options are now currently exercisable. Effective
January 1, 1995, Mr. Holmes became the Chairman of the Board and Chief Executive
Officer of Time Warner Interactive, Inc., a subsidiary of the Company, and
resigned as an executive officer of the Company.
Compensation Arrangements with Certain Affiliated Directors
The Company has an employment agreement with Mr. Parsons who, on February
1, 1995, became the President of the Company. The agreement expires on December
31, 1999 and is substantially the same in form as the agreements with the
Company's other executive officers as described above. His agreement provides
for a minimum annual salary of $600,000, deferred compensation equal to 50% of
his annual salary, discretionary annual bonus and split dollar life insurance
coverage of $4 million for his life. In addition, pursuant to this agreement,
Mr. Parsons was awarded 300,000 stock options at an exercise price equal to the
fair market value of the Common Stock on the date of award, and the Company is
obligated to recommend that the Compensation Committee award him an additional
300,000 options prior to February 28, 1996, half of which are to have an option
exercise price equal to the fair market value of the Common Stock on the date of
the award and one quarter of which are to be awarded at an exercise price 25%
and 50%, respectively, above the fair market value of the Common Stock on the
date of the award. Mr. Parsons also participates in the Company's employee and
senior executive benefit plans available to employees and senior executives
generally and will be entitled to receive supplemental payments from the Company
that will achieve a total retirement benefit equal to what he would have
received if he had five additional years of credited service under the Pension
Plan (described below).
Under his employment agreement dated as of January 10, 1990, Mr. Munro
served as an officer of the Company at an annual salary of $750,000 until July
24, 1994 when he retired as an employee and since then continues to serve as an
advisor to the Company for five years. He receives no annual compensation for
his advisory services; but in lieu thereof, on July 24, 1994, $3,082,402 was
credited to a deferred account. This deferred account will be maintained
substantially in accordance with the arrangements described under the heading
'Deferred Compensation' herein and payments from the account will be made to Mr.
Munro in 44 quarterly installments that commenced on September 30, 1994. During
1994, the Company provided approximately $80,000 of personal benefits to Mr.
Munro.
DEFERRED COMPENSATION
Deferred compensation for executive officers is deposited into separate
accounts maintained by the Company for each of such officers. The Company
appoints an investment advisor for each such account subject to approval by the
relevant executive. Funds are invested or deemed to be invested in securities as
directed by the investment advisor, with the assumed after-tax effect upon the
Company of gains, losses and income, and distributions thereof, and of interest
expenses and brokerage commissions and other direct expenses attributed thereto,
being credited or charged to the account. Payments are generally made to the
officer from the account in installments to liquidate the account over a period
of three to five years commencing on the date employment was to terminate under
the employment agreement, or at such other times as the officer might have
elected. Such payments include an amount equal to the assumed tax benefit to the
Company of the compensation deduction available for tax purposes for the portion
of the account represented by the net appreciation in such account, even though
the Company might not actually receive such tax benefit.
Amounts paid by the Company to the deferred compensation accounts of the
named executive officers of the Company for 1994 are reflected in the Summary
Compensation Table above.
20
<PAGE>
TIME WARNER EMPLOYEES' PENSION PLAN
The Time Warner Employees' Pension Plan, as amended (the 'Pension Plan'),
provides benefits to eligible employees, including officers, of the Company and
certain of its subsidiaries. Directors who are not also employees of the Company
are not eligible to participate in the Pension Plan.
A participant accrues benefits under the Pension Plan on the basis of
1 2/3% of the average annual compensation (defined as the average of the 60
highest consecutive months of compensation, which includes regular salary,
overtime and shift differential payments, and non-deferred bonuses paid
according to a regular program) for each year of service up to 30 years and
1/2% for each year of service over 30. Compensation for purposes of calculating
average annual compensation under the Pension Plan is limited to $200,000 per
year for 1988 through 1993 and $150,000 per year for 1994 and thereafter (both
subject to adjustments provided in the Code). Eligible employees become vested
in all benefits under the Pension Plan on the earlier of five years of service
or certain other events.
Annual pension benefits are reduced by a Social Security offset determined
by a formula that takes into account credited service up to 35 years, covered
compensation up to the average Social Security wage base and a disparity factor
based on the age at which Social Security benefits are payable (the 'Social
Security Offset'). The pension benefit of participants on December 31, 1977 in
the former Time Employees' Profit-Sharing Savings Plan (the 'Profit Sharing
Plan') is further reduced by a fixed amount attributable to a portion of the
employer contributions and investment earnings credited to such employees'
account balances in the Profit Sharing Plan as of such date (the 'Profit Sharing
Plan Offset').
Under the Pension Plan, employees who are at least 60 years old and have
completed at least ten years of service may elect early retirement and receive
the full amount of their annual pension ('early retirement'). An early
retirement supplement is payable to an employee terminating employment at age 55
and before age 60, after 20 years of service, equal to the actuarial equivalent
of such person's accrued benefit, or, if greater, an annual amount equal to 35%
of such person's average compensation determined under the Pension Plan. The
supplement ceases when the regular pension commences at age 60 or upon the death
of the retiree.
Federal law limits both the amount of compensation that is eligible for the
calculation of benefits and the amount of benefits derived from employer
contributions that may be paid to participants under the Pension Plan. However,
as permitted by the Employee Retirement Income Security Act of 1974, as amended
('ERISA'), the Company has adopted the Time Warner Excess Benefit Pension Plan
(the 'Excess Plan'), which provides for payments by the Company of certain
amounts which employees of the Company would have received under the Pension
Plan if eligible compensation were limited to $250,000 in 1994 (increased 5% per
year thereafter, to a maximum of $350,000) and there were no payment
restrictions. For purposes of the Excess Plan, the $200,000 limit (as indexed
for years after 1989) on eligible compensation will only apply to compensation
received in 1988 through 1993; the $250,000 limit (as adjusted) will apply to
compensation received in 1994 and thereafter.
Certain employees of WCI and its subsidiaries have become employees of the
Company and, accordingly, have become participants in the Pension Plan
('Transferred Employees'). Effective December 31, 1990, benefits accrued under
the Warner Communications Pension Plan ('WCPP') for certain of these Transferred
Employees (including the accrued benefits of Mr. Wasserman, Mr. Holmes and
certain other executive officers of the Company) were transferred to the Pension
Plan. Upon retirement or other termination of employment, the pension benefits
of Transferred Employees whose accrued benefits from the WCPP were transferred
to the Pension Plan will consist of two parts: (i) the accrued benefits
transferred from the WCPP (based on the WCPP formula stated below) adjusted to
reflect the average final compensation at actual retirement, and reduced if
payable before age 65; and (ii) the full amount of their annual pension accrued
under the terms of the Pension Plan following the date of transfer. These
benefits will be payable from
21
<PAGE>
the Pension Plan and, where applicable, the Excess Plan. Benefits accrued under
the WCPP that were transferred to the Pension Plan were based on the following
formula: For post-1978 service, 1 1/4% of average final pay (generally, highest
consecutive five-year average salary and bonus compensation) up to the
participant's covered compensation limit (based on the participant's average
compensation covered by Social Security) and 1 2/3% of average final pay over
the covered compensation limit. For pre-1979 service, 45% of the participant's
average final pay times a fraction, the numerator of which is years of service
to 1979 and the denominator of which is years of projected service to his normal
retirement date, prorated for less than 15 years of service. At February 1,
1995, the accrued annual benefit payable from the Pension Plan and the Excess
Plan pursuant to the terms of the WCPP would be $120,000 to Mr. Wasserman and
$37,957 to Mr. Holmes.
The following table shows the estimated annual pension payable upon
retirement to employees in specified remuneration and years-of-service
classifications. The amounts shown in the table do not reflect the effect of the
previously-described (i) Social Security Offset, (ii) Profit Sharing Plan Offset
or (iii) early retirement supplements. The amount of the estimated annual
pension is based upon a pension formula which applies to all participants in
both the Pension Plan and the Excess Plan. The estimated amounts are based on
the assumption that payments under the Pension Plan will commence upon normal
retirement (generally age 65) or early retirement, that the Pension Plan will
continue in force in its present form and that no joint and survivor annuity
will be payable (which would on an actuarial basis reduce benefits to the
employee but provide benefits to a surviving beneficiary). Amounts calculated
under the pension formula which exceed ERISA limits will be paid under the
Excess Plan from the Company's assets and are included in the amounts shown in
the following table.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION FOR
HIGHEST CONSECUTIVE YEARS OF CREDITED SERVICE
FIVE YEAR AVERAGE --------------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
---------------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000.......................... $ 16,667 $ 25,000 $ 33,334 $ 41,668 $ 50,001 $ 52,501
200,000.......................... 33,334 50,001 66,668 83,335 100,002 105,002
400,000.......................... 66,668 100,002 133,336 166,670 200,004 210,004
600,000.......................... 100,002 150,003 200,004 250,005 300,006 315,006
800,000.......................... 133,336 200,004 266,672 333,340 400,008 420,008
</TABLE>
The amount of covered compensation that would be considered in the
determination of the highest consecutive 60 months of compensation under the
Pension Plan and the Excess Plan for each of Messrs. Levin, Haje, Wasserman,
Holmes and Hullin is limited as a result of the imposition of the limitations on
eligible compensation. However, because combined payments under the Pension Plan
and the Excess Plan are based on the average of the 60 highest consecutive
months of compensation (taking into account the compensation limits only for
1988 and thereafter), the compensation used for determining benefits under such
Plans for Mr. Levin (and employees who participated in the Pension Plan prior to
1988) will include eligible compensation in years prior to 1988 which exceeded
these limits. The estimated annual benefits payable under the Pension Plan and
the Excess Plan, as of February 1, 1995 would be based on average compensation
of $729,248 for Mr. Levin; $232,305 for Mr. Haje; $229,224 for Mr. Wasserman;
$229,224 for Mr. Holmes; and $234,230 for Mr. Hullin with 22.8, 4.4, 5.2, 5.2
and 4.1 years of credited service as of February 1, 1995, respectively. In
addition, pursuant to Mr. Hullin's employment agreement, Mr. Hullin will be
entitled to receive supplemental payments from the Company that will achieve a
total retirement benefit equal to what he would have received if he had five
additional years of credited service under the Pension Plan.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
The chart below compares the Company's Common Stock performance with the
performance of the Standard & Poor's 500 Composite Stock Price Index ('S&P 500
Index') and a Peer Group
22
<PAGE>
Index by measuring the changes in common stock prices from December 31, 1989
plus reinvested dividends and distributions. Pursuant to the rules of the
Securities and Exchange Commission, the Company has created a peer group index
with which to compare its own stock performance since a published industry or
line-of-business index does not exist. The Company has attempted to select a
grouping of companies that includes companies in lines of business similar to
its own. Because of the Company's involvement in a broad mix of five major media
and entertainment businesses and the fact that no other public companies are
engaged in all of these businesses, no grouping could closely mirror the
Company's businesses or weight those businesses to match the relative
contributions of each of the Company's business units to the Company's
performance. All of the companies included in the Company's Peer Group Index are
engaged in only some of the businesses in which the Company is engaged and some
are also engaged in businesses in which the Company does not participate. The
common stocks of the following companies have been included in the Peer Group
Index: Cablevision Systems Corporation, Capital Cities/ABC, Inc., CBS Inc.,
Comcast Corporation, McGraw-Hill Inc., Meredith Corporation, The News
Corporation Limited, Tele-Communications, Inc., Viacom Inc. and The Walt Disney
Company. Because it was acquired by Viacom Inc. during 1994, Paramount
Communications Inc., which was previously included in the Peer Group, has been
removed from the Peer Group Index. The chart assumes $100 was invested on
December 31, 1989 in each of the Company's Common Stock, the S&P 500 Index and
the Peer Group Index and reflects reinvestment of dividends and distributions on
a monthly basis and annual market capitalization weighting.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
VALUE AT TIME WARNER PEER GROUP S&P 500
DECEMBER 31 COMMON STOCK INDEX INDEX
------------ ------------ ---------- ---------
<S> <C> <C> <C>
1989.... $100 $100 $ 100
1990.... 72 81 97
1991.... 80 105 126
1992.... 107 141 136
1993.... 164 171 150
1994.... 131 172 152
</TABLE>
23
<PAGE>
ADDITIONAL INFORMATION
On January 27, 1992, R.H. Macy & Co., Inc. commenced a case seeking
reorganization under the federal bankruptcy laws. Mr. Finkelstein, a director of
the Company, was at that time an executive officer of R.H. Macy & Co., Inc. Mr.
Haje, an executive officer of the Company, agreed to an order entered on
September 27, 1993 by the U.S. Office of Thrift Supervision that, for a period
of five years, suspends him from practicing before the OTS and requires him not
to engage in the legal representation of a federally insured depository
institution. Mr. Haje also agreed, for such period, not to participate in any
unsafe or unsound banking practices or the submission of any materially
misleading statements to any federal banking authority. Such order relates to
events that occurred while Mr. Haje was a partner in a law firm that represented
a federally insured depository institution, prior to his employment by the
Company, and places no limits on his services for the Company.
CERTAIN LITIGATION
As the Company has disclosed and discussed more fully in its prior proxy
statements, stockholder class actions, some of which have purportedly been
brought derivatively on behalf of the Company or WCI, relating to the merger
agreement between the Company and WCI and related transactions have been pending
since 1989 in the Court of Chancery for the State of Delaware, in and for New
Castle County ('Delaware Chancery Court'), or in the Supreme Court of the State
of New York, County of New York ('New York Supreme Court'). The action pending
in the Delaware Chancery Court is a consolidated action.
One of the purported stockholder class actions pending in the New York
Supreme Court (the 'Berger action') was purportedly brought on behalf of a
plaintiff class that consists of persons (other than the defendants and their
affiliates) who held shares of WCI common stock on August 23, 1989 and before
January 10, 1990 against WCI, certain of WCI's then directors (including three
persons who will continue as directors after the Annual Meeting), the Company,
the Company's financial advisors, Wasserstein Perella & Co., Inc. and Shearson
Lehman Hutton Inc., and WCI's financial advisor, Lazard Freres & Co. Plaintiffs
seek a declaratory judgment that WCI's then directors and the Company breached
their fiduciary duties to WCI's stockholders as a result of the terms and
structure of the merger transaction and that the advisors aided and abetted this
breach, as well as rescission and compensatory damages. The defendants answered
the complaint, denying the material allegations thereof and asserting various
affirmative defenses. Argument on both sides' motions for partial summary
judgment on plaintiffs' contract claim for additional interest of approximately
$20 million in connection with the consideration paid in the merger transaction
was heard on February 22, 1994. On August 16, 1994, the Court granted
defendants' motion for partial summary judgment and dismissed plaintiffs'
contract claim. Plaintiffs filed a Notice of Appeal on September 14, 1994. The
other action pending in New York Supreme Court was brought on behalf of all
stockholders of the Company against the Company, the persons who were then the
directors of the Company (including six of the persons who will continue as
directors after the Annual Meeting) and the Company's financial advisors.
Principally, plaintiffs seek a declaratory judgment that the defendant directors
breached their fiduciary duties and that the Company and its advisors aided and
abetted those breaches. Defendants have not yet been required to respond to the
complaint in this action. A Stipulation of Voluntary Discontinuance without
prejudice was submitted to the Court on September 14, 1994, and is awaiting
approval.
The consolidated action brought purportedly on behalf of stockholders of
WCI is pending in the Delaware Chancery Court against WCI, the persons who were
then the directors of WCI (including four persons who will continue as directors
of the Company after the Annual Meeting) and the Company. Plaintiffs seek
rescission of the merger and related transactions alleging that WCI's directors
breached their fiduciary duties to WCI's stockholders and the Company aided and
24
<PAGE>
abetted that breach allegedly as a result of the terms and structure of the
merger transaction. This action has been stayed pending the resolution of the
Berger action.
APPROVAL OF THE AMENDED AND RESTATED TIME WARNER INC.
ANNUAL BONUS PLAN FOR EXECUTIVE OFFICERS
At the 1994 Annual Meeting of Stockholders, the Company's stockholders
approved the Time Warner Inc. Annual Bonus Plan for the Chief Executive Officer
(the 'CEO Plan'). The purpose of the CEO Plan was to preserve the Company's tax
deduction for bonuses paid to the Company's Chief Executive Officer ('CEO') in
light of the Omnibus Budget Reconciliation Act of 1993 (the 'Act'). Management
is proposing that the Company's stockholders approve an amended and restated
Time Warner Inc. Annual Bonus Plan for Executive Officers (the 'Plan') that
would cover, in addition to the CEO, those executive officers of the Company
determined annually by the Company's Compensation Committee.
In general, the Act denies a publicly held corporation a deduction for
federal income tax purposes for compensation in excess of $1 million per year
paid after January 1, 1994 to its CEO and the four other officers whose
compensation is disclosed in its proxy statement, subject to certain exceptions.
The Plan is intended to qualify under one of these exceptions which, in
substance, requires that the bonus be payable as the result of the attainment of
one or more objective, pre-established performance goals and that a person with
knowledge of the relevant facts be able to calculate the maximum amount payable
to any one executive under the plan. In addition, prior to any payments, the
plan must be approved by the corporation's stockholders and the corporation's
compensation committee must certify that the performance standard has been met.
The proposed regulations (the 'Regulations') issued by the Internal Revenue
Service under the Act permit the compensation committee to pay a bonus that is
less than the amount calculated under the plan.
The CEO Plan covered only the Company's CEO. The other four executives
named in the Summary Compensation Table elected to defer a portion of their 1994
annual bonuses and, after giving effect to the 'grandfather' provisions of the
Act, the compensation payable to them for 1994 did not exceed the $1 million
limitation as defined in the Act and the Regulations. On February 1, 1995, Mr.
Parsons joined the Company as President and in order to ensure the deductibility
of anticipated annual bonuses payable for 1995 and thereafter to Mr. Parsons and
to the other executive officers named from time to time in the Summary
Compensation Table, management is proposing to amend the Plan to include
additional executive officers of the Company as determined annually by the
Company's Compensation Committee (the 'Participants'). Subject to stockholder
approval of the Plan, the Compensation Committee has approved the Plan and has
designated as Participants for 1995 each of the five executive officers of the
Company who is a 'covered employee' (as defined in the Act and the Regulations)
for 1995.
The following summary of the Plan does not purport to be complete and is
subject to, and qualified in its entirety by, reference to the text of the Plan
set forth in Annex A to this Proxy Statement. The Plan provides for a maximum
bonus pool to be determined for any calendar year based on a percentage of the
amount by which the Company's EBITDA (as defined) for such year exceeds the
Company's average EBITDA for the preceding three years (the 'Base EBITDA').
Thus, for example, if there were no EBITDA increase over Base EBITDA, then no
bonuses would be paid to Participants under the Plan. In addition, the
Compensation Committee will have the discretion to award a Participant an actual
bonus for any year that is less than the maximum calculated pursuant to the Plan
and to award aggregate bonuses under the Plan that are less than the maximum
bonuses calculated pursuant to the Plan.
For purposes of the Plan, EBITDA means combined business segment operating
income before interest, taxes, depreciation and amortization and the Company's
EBITDA and Base EBITDA each includes (i) 100% of the EBITDA of the Company's
Entertainment Group, which
25
<PAGE>
consists primarily of Time Warner Entertainment Company, L.P., a limited
partnership in which the Company currently owns a 63.27% residual equity
interest ('TWE'), and (ii) a pro rata portion (based on the percentage
ownership) of the EBITDA of any entity that the Company or TWE accounts for by
the equity method and as to which the Company's or TWE's pro rata share of the
EBITDA of such entity exceeds $25 million. The calculation of the maximum bonus
pool payable under the Plan for any calendar year can be expressed by the
following formula:
Maximum Bonus Pool = (Current EBITDA - Base EBITDA) x AP
where AP is the applicable percent determined pursuant to the following table
(with the AP for percentage EBITDA increases between the increases shown in the
table determined by interpolation):
<TABLE>
<CAPTION>
PERCENTAGE INCREASE
IN CURRENT EBITDA
OVER BASE EBITDA AP
----------------------------------------------------------------------------------- ----
<S> <C>
no increase over Base EBITDA....................................................... 0%
5% increase over Base EBITDA....................................................... 2.25%
10% increase over Base EBITDA...................................................... 4.00%
15% increase over Base EBITDA...................................................... 5.25%
20% or higher increase over Base EBITDA............................................ 6.00%
</TABLE>
The Maximum Bonus Pool is the maximum amount of all annual bonuses payable
to Participants in the Plan for any calendar year. The maximum bonus payable to
any Participant under the Plan for any such calendar year will be determined
annually by the Compensation Committee but cannot exceed 50% of the Maximum
Bonus Pool. For 1995, the maximum bonus payable to any Participant under the
Plan is 50% of the Maximum Bonus Pool. Current EBITDA is the Company's EBITDA
for such calendar year, subject to adjustment as described below, and Base
EBITDA is the Company's average EBITDA for the three years preceding the year
for which the Maximum Bonus Pool is being calculated, subject to adjustment as
described below.
The Plan provides that the Company's EBITDA in any calendar year and/or the
Base EBITDA will be adjusted in the event the Company or the Entertainment Group
acquires or disposes, in whole or in part, of any entity as to which more than
$25 million of EBITDA in the year prior to its acquisition or disposition was or
would have been included in the Company's EBITDA (hereinafter referred to as a
Significant Business). The Plan provides that the EBITDA of a Significant
Business will be excluded from the Company's EBITDA for the year in which it was
acquired or disposed of. In the case of an acquisition of a Significant
Business, the Plan provides that for each year subsequent to the year in which
the acquisition occurs, the Base EBITDA is adjusted by including the EBITDA of
the Significant Business in each of the three years included in the calculation
of Base EBITDA and the Company's EBITDA will include the EBITDA of such
Significant Business. In the case of a disposition of a Significant Business,
the Plan provides that for the year in which the disposition occurs and for each
subsequent year, the Base EBITDA is adjusted by excluding the EBITDA of the
Significant Business in each of the three years included in the calculation of
Base EBITDA and the Company's EBITDA will exclude the EBITDA of such Significant
Business.
The Plan also provides that the Base EBITDA is adjusted in the event any
change in accounting principles becomes effective that would have increased or
decreased the Company's EBITDA by more than $10 million in the year prior to the
year in which such change becomes effective. If any accounting change has such
an impact, each year included in the Base EBITDA calculation would be adjusted
up or down by an amount equal to the increase or decrease such accounting change
would have had on the Company's EBITDA for such year.
Unless a Participant elects to defer all or a portion of his or her bonus,
payments under the Plan will be made as soon as practicable after the
Compensation Committee certifies that the
26
<PAGE>
performance goals have been met; provided that the Compensation Committee has
the discretion to pre-pay all or a portion of any bonus awarded for any year if
the Act and the Regulations permit. The Plan also provides that all calculations
of Base EBITDA and Current EBITDA, including any adjustments thereto, will be
reviewed by the Company's independent auditors.
Pursuant to the requirements of the rules and regulations adopted by the
Securities and Exchange Commission, the following table sets forth the maximum
annual bonus that would have been payable under the Plan to any one Participant
for 1994 if the Plan had been in effect for 1994 and if such maximum bonus had
been 50% of the Maximum Bonus Pool.
ANNUAL BONUS PLAN FOR EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
DOLLAR VALUE OF
1994 MAXIMUM
NAME AND POSITION ANNUAL BONUS
--------------------------------------------------------------------------- ---------------
<S> <C>
Any one Participant........................................................ $ 8.43 million*
</TABLE>
------------
* Subject to the requirement that the maximum bonuses payable to all
Participants cannot exceed the Maximum Bonus Pool, which would have been
$16.86 million for 1994.
The Company's Board of Directors has set qualitative annual goals for Mr.
Levin for 1995 that are not based on growth in the Company's EBITDA. In
addition, Mr. Levin has established qualitative annual goals for 1995 for each
of the other Participants in the Plan that are not based on growth in the
Company's EBITDA. Under the terms of the Plan, the Compensation Committee
retains the discretion to award any Participant an annual bonus that is less
than the amount calculated pursuant to the Plan. The Compensation Committee
intends to consider each Participant's achievement of his other goals in
determining the actual amount of his respective 1995 annual bonus. The Company
anticipates that similar qualitative goals will be established and considered in
determining each Participant's bonus in future years.
Participation in the Plan is not exclusive and will not prevent a
Participant from participating in any other compensation plan of the Company or
from receiving any other compensation from the Company. The Compensation
Committee may amend the Plan from time to time as it deems advisable provided
that any such amendment must comply with all applicable laws and the
requirements for exemption (to the extent necessary) under the Act and the
Regulations.
As indicated in the Compensation Committee Report presented elsewhere in
this Proxy Statement, the Compensation Committee believes that an annual bonus
is an important part of the overall compensation of the Company's executive
officers. If the Plan is not approved by stockholders at the Annual Meeting, no
payments will be made under the Plan; however, the Board of Directors will
retain the right to pay the Company's executive officers an annual bonus based
on other goals established by the Board or the Chief Executive Officer. In such
event, a portion of such bonuses may not be deductible by the Company for
federal income tax purposes.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the votes cast on the proposal,
either in person or by proxy, by holders of Common Stock entitled to vote is
required to approve the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDED AND
RESTATED TIME WARNER INC. ANNUAL BONUS PLAN FOR EXECUTIVE OFFICERS.
27
<PAGE>
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP as independent
auditors of the Company to audit its consolidated financial statements for 1995
and has determined that it would be desirable to request that the stockholders
approve such appointment.
Ernst & Young LLP has served the Company and its subsidiaries as
independent auditors for many years. Representatives of Ernst & Young LLP will
be present at the Annual Meeting with the opportunity to make a statement if
they desire to do so and to respond to appropriate questions from stockholders.
VOTE REQUIRED FOR APPROVAL
Stockholder approval is not required for the appointment of Ernst & Young
LLP, since the Board of Directors has the responsibility for selecting auditors.
However, the appointment is being submitted for approval at the Annual Meeting.
No determination has been made as to what action the Board of Directors would
take if stockholders do not approve the appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS
PROPOSAL REGARDING CIGARETTE ADVERTISING
The Sisters of the Sorrowful Mother, 9056 North Deerbrook Trail, Brown
Deer, Wisconsin 53223, the owner of 37,300 shares of Common Stock, and Mercy
Health Services, 34605 Twelve Mile Road, Farmington Hills, Michigan 48331, the
owner of 8,600 shares of Common Stock, have advised the Company that they intend
to propose a resolution at the Annual Meeting. The proposed resolution and
statement in support thereof are set forth below:
WHEREAS - Smoking annually causes more than one of every six deaths in
the USA; over 430,000 die from cigarette-caused diseases and 50,000 die from
effects related to passive smoking:
Given these statistics, in 1993 The Seattle Times rejected all cigarette
advertising, even though it meant a loss of revenues. The paper's publisher
cited growing medical evidence on the dangers of smoking, as well as tobacco
advertisers' recent targeting of youth and racial minorities, as prompting the
move: 'The evidence that smoking is the nation's No. 1 health problem is
overwhelming,' Publisher Frank Blethen said. 'In good conscience, we can no
longer provide a forum for promoting sales of these products.'
The Center for Disease Control calculates every cigarette steals 7 minutes
of a smoker's life, adding up to 5 million years of potential life Americans
lose to cigarettes annually.
In 1964 the cigarette industry adopted a voluntary code to dissuade youth
from smoking; however it abolished enforcement mechanisms for the code in 1967.
Now the tobacco industry actively works against enforcement mechanisms at local
levels that would keep youth from smoking.
The industry's alleged violations of the code include:
using models appearing to be under age 25, and/or who have just
participated in physical activity;
promoting 'low-tar and nicotine' brands as reducing health risks;
gearing lower-priced cigarettes to low-income peoples;
implying smoking makes one 'alive with pleasure' when its use is
lethal;
28
<PAGE>
Our Company's Time Inc. division received 25% of all magazine cigarette
advertising in the U.S.A. People and Sports Illustrated accounted for 18% of all
magazine cigarette advertisements;
RESOLVED: that shareholders ask management for a report to be prepared for
requesting shareholders by September 1, 1996. This Report, prepared at a
reasonable cost and free of proprietary information, will develop ethical and
moral criteria providing guidelines related to cigarette advertising in our
publications.
In preparing this report we believe the following issues should be
analyzed:
1. Whether consumers and the Board feel cigarette ads in our
publications:
a. encourage children to smoke by using cartoon characters such as
Joe Camel;
b. use models perceived to be under 25;
c. falsely portray smoking as being 'cool' or stylish;
d. use slogans such as 'alive with pleasure' that are contradictory
and misleading.
2. Policies and practices our company might follow to ensure that
cigarette ads we accept are not manipulative or misleading.
3. The pluses and minuses of refusing all tobacco ads.
SUPPORTING STATEMENT
Marlboro and Camel are among the top brands favored by minors. Marlboro is
the most heavily advertised cigarette brand in Sports Illustrated. According to
the Federal Center for Disease Control, Marlboro is the most popular brand
smoked by children. Although it declined by half for 1992, according to the
Leading National Advertiser, in the first 6 months of 1988, 40% of all Camel
magazine advertisements were in SI. Approximately 19% of all readers of SI are
under 18.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
As a Company, we have always been committed to free speech in all its
forms. So, therefore, when an advertisement for a lawfully distributed product,
such as cigarettes, is submitted for inclusion in one of our publications, we
leave it to that publication to review the ad's content to determine whether it
is in good taste and non-offensive to the readers of that particular periodical
and appears to comply with all relevant federal, state and local regulations
governing the product's advertisements. Having made those determinations, the
Company believes that its publication has fully satisfied its obligation as a
responsible public medium.
Thus, the Company views the submitted proposal to be inappropriate,
unnecessary and not in the best interest of the Company's stockholders.
PROPOSAL REGARDING STAGGERED BOARD
John J. Gilbert and Margaret R. Gilbert, 29 East 64th Street, New York, New
York 10021, representing at least 1,000 shares of Common Stock, have advised the
Company that they intend to propose a resolution at the Annual Meeting. The
proposed resolution and statement in support thereof are set forth below:
RESOLVED: That the stockholders of Time Warner Inc., assembled in
annual meeting in person and by proxy, hereby request that the Board of
Directors take the needed steps to provide that at future elections of
directors new directors be elected annually and not by classes as is now
provided and that on expiration of present terms of directors their
subsequent election shall also be on an annual basis.
29
<PAGE>
REASONS
Continued very strong support along the lines we suggest were shown at the
last annual meeting when 47%, a large increase over the previous year, 2,586
owners of 127,900,170 shares, were cast in favor of this proposal. The vote
against included 1,243 unmarked proxies.
Last year ARCO, to its credit, voluntarily ended theirs, stating that when
a very high percentage, 34.6%, desired it to be changed to an annual election it
was reason enough for them to change it. Several other companies have also
followed suit such as: Pacific Enterprises, Katy Industry, Hanover Direct,
Campbell Soup and others.
Because of normal need to find new directors and because of environmental
problems and the recent avalanche of derivative losses and many groups desiring
to have directors who are qualified on the subjects, we think that ending the
stagger system of electing directors is the answer. In addition, some
recommendations have been made to carry out the Valdez 10 points. The 11th, in
our opinion, should be to end the stagger system of electing directors and to
have cumulative voting.
Recently Equitable Life Insurance Company, which is now called Equitable
Companies, converted from a policy owned company to a public stockholder
meeting. Thanks to AXA, the controlling French insurance company not wanting it
they now do not have a staggered board.
The Orange and Rockland Utility Company had a terrible time with the
stagger system and its 80% clause to recall a director. The chairman was
involved in a scandal affecting the company. Not having enough votes the meeting
to get rid of the chairman had to be adjourned. Finally, at the adjourned
meeting enough votes were counted to recall him.
If you agree, please mark your proxy for this resolution; otherwise it is
automatically cast against it, unless you have marked to abstain.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
The Board believes that the Company relies, even more than most other
companies, on the quality, commitment and creativity of people who work for it.
Its people are of vital importance to the success of its unique mix of products
and services and to the expansion of its businesses. The Board believes that the
staggered Board system gives the people of the Company, especially its division
heads and journalistic and creative communities, an enhanced sense of
continuity, purpose and direction that is essential to the growth of its
businesses. The Board, therefore, believes that the present system of
classification is in the best interest of the stockholders and should be
continued. The provision of the Company's Restated Certificate of Incorporation
that the Board of Directors be divided into three classes was approved at the
special meeting of the Company's stockholders held on December 7, 1983. The
provision reduces the possibility of a sudden and surprise change in majority
control of the Board of Directors without the support of the incumbent Board.
This provision and others approved by the stockholders in December 1983 are
designed to impede disruptive and inequitable tactics that have become
relatively common corporate takeover practices.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the votes cast on each stockholder
proposal, either in person or by proxy, by holders of Common Stock entitled to
vote is required to adopt each such stockholder proposal.
30
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ('SEC') and the New York
Stock Exchange. Officers, directors and greater than ten-percent stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on a review of the copies of such forms
furnished to the Company, or written representations that no Forms 5 were
required, the Company believes that during 1994, its officers, directors and
greater than ten-percent beneficial owners complied with all applicable Section
16(a) filing requirements.
EXPENSES OF SOLICITATION
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be borne by the Company. In addition to
solicitation by use of the mails, proxies and voting instructions may be
solicited by directors, officers and employees of the Company in person or by
telephone, telegram or other means of communication. Such directors, officers
and employees will not be additionally compensated but may be reimbursed for
reasonable out-of-pocket expenses in connection with such solicitation. The
Company has retained D. F. King & Co., Inc. at an estimated cost of $20,000,
plus reimbursement of expenses, to assist in its solicitation of proxies from
brokers, nominees, institutions and individuals. Arrangements will also be made
with custodians, nominees and fiduciaries for forwarding proxy solicitation
materials to beneficial owners of shares held of record by such custodians,
nominees and fiduciaries, and the Company will reimburse such custodians,
nominees and fiduciaries for reasonable expenses incurred in connection
therewith.
PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present
proper proposals for inclusion in the Company's proxy statement and for
consideration at the next annual meeting of its stockholders by submitting their
proposals to the Company in a timely manner. In order to be so included for the
1996 Annual Meeting, stockholder proposals must be received by the Company no
later than December 1, 1995, and must otherwise comply with the requirements of
Rule 14a-8. In addition, the Company's By-laws establish an advance notice
procedure with regard to certain matters, including stockholder proposals not
included in the Company's proxy statement, to be brought before an annual
meeting of stockholders. In general, notice must be received by the Secretary of
the Company not less than 60 days nor more than 90 days prior to the anniversary
date of the immediately preceding annual meeting and must contain specified
information concerning the matters to be brought before such meeting and
concerning the stockholder proposing such matters. If the date of the annual
meeting is more than 30 days earlier or more than 60 days later than such
anniversary date, notice must be received not earlier than the 90th day prior to
such annual meeting and not later than the close of business on the later of the
60th day prior to such annual meeting or the 10th day following the day on which
public announcement of the date of such meeting is first made. If a stockholder
who has notified the Company of his intention to present a proposal at an annual
meeting does not appear or send a qualified representative to present his
proposal at such meeting, the Company need not present the proposal for a vote
at such meeting.
All notices of proposals by stockholders, whether or not to be included in
the Company's proxy materials, should be sent to the attention of the Secretary
of the Company at 75 Rockefeller Plaza, New York, New York 10019.
31
<PAGE>
GENERAL
The Board of Directors does not know of any other matters to be presented
at the Annual Meeting. If any additional matters are properly presented, the
persons named in the proxy will have discretion to vote in accordance with their
own judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS,
GERALD M. LEVIN
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
March 30, 1995
32
<PAGE>
ANNEX A
AMENDED AND RESTATED
TIME WARNER INC.
ANNUAL BONUS PLAN FOR EXECUTIVE OFFICERS
1. PURPOSE.
The purpose of the Time Warner Inc. Annual Bonus Plan for Executive
Officers (hereinafter the 'Plan') is to provide for the payment of annual cash
bonuses to certain executive officers of the Company that qualify for income tax
deduction by the Company.
2. DEFINITIONS.
The following terms (whether used in the singular or plural) have the
meanings indicated when used in the Plan:
2.1. 'Annual Award' means the actual dollar amount of the annual cash
bonus determined by the Committee to be payable to a Participant under the
Plan, which may not exceed the Maximum Bonus.
2.2. 'AP' means the applicable percent determined pursuant to Section
3.1.
2.3. 'Base EBITDA' means the average of the Company's EBITDA for the
three years preceding the year for which the Maximum Bonus Pool is being
calculated.
2.4. 'Board' means the Board of Directors of the Company.
2.5. 'Code' means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute or statutes thereto. Reference to
any specific Code section shall include any successor section.
2.6. 'Committee' means the Compensation Committee of the Board, and
any successor thereto.
2.7. 'Company' means Time Warner Inc., a Delaware corporation, and any
successor thereto.
2.8. 'Company's EBITDA' for any year shall mean (i) EBITDA of the
Company for that year, plus (ii) EBITDA of the Entertainment Group for that
year, plus (iii) a pro rata portion (based on the percentage ownership) of
the EBITDA of any entity or business that the Company or TWE accounts for
by the equity method of accounting and as to which the Company's or TWE's
pro rata share of the EBITDA of such entity or business for that year
exceeds $25 million, all determined in accordance with GAAP.
2.9. 'Current EBITDA' means the Company's EBITDA for the year with
respect to which the Maximum Bonus Pool is being calculated.
2.10. 'EBITDA' for any year of any entity or business shall mean the
combined operating income (loss) before interest, taxes, depreciation and
amortization of the business segments of such entity or business for that
year.
2.11. 'Entertainment Group' shall have the meaning ascribed thereto in
the Company's then most recent Annual Report on Form 10-K, provided that if
such term is not used in the Company's most recent Form 10-K, then such
term shall mean TWE.
2.12. 'GAAP' shall mean generally accepted accounting principles
applicable to the Company as in effect from time to time.
2.13. 'Maximum Bonus' means the maximum annual cash bonus payable to a
Participant pursuant to the Plan with respect to any calendar year, which
(i) shall be determined by the Committee prior to the beginning of each
such calendar year, or at such later time as may be
A-1
<PAGE>
permitted by the Code and the Regulations, (ii) shall be expressed as a
percentage of the Maximum Bonus Pool and (iii) shall not exceed 50 percent
of the Maximum Bonus Pool.
2.14. 'Maximum Bonus Pool' means the maximum annual cash bonuses
payable to all Participants calculated pursuant to Section 3.1.
2.15. 'Participant' means those executive officers of the Company as
the Committee shall designate to participate in the Plan for any calendar
year prior to the beginning of each such calendar year, or at such later
time as may be permitted by the Code and the Regulations.
2.16. 'Plan' has the meaning ascribed thereto in Section 1.
2.17. 'Regulations' shall mean the rules and regulations adopted or
proposed by the Internal Revenue Service under section 162(m) of the Code.
2.18. 'Significant Business' has the meaning ascribed thereto in
Section 3.2.
2.19. 'TWE' means Time Warner Entertainment Company, L.P., a Delaware
limited partnership, and any successor thereto.
3. CALCULATION OF MAXIMUM BONUS POOL.
3.1. Subject to the other provisions of this Section 3, the Maximum Bonus
Pool under the Plan with respect to any year shall be determined pursuant to the
following formula:
Maximum Bonus Pool = (Current EBITDA - Base EBITDA) x AP
where AP is the applicable percent determined pursuant to the following table
(with the AP for percentage increases between the increases shown in the table
determined by interpolation):
<TABLE>
<CAPTION>
PERCENTAGE INCREASE
IN CURRENT EBITDA
OVER BASE EBITDA AP
----------------------------------------------------------------------------------- ----
<S> <C>
no increase over Base EBITDA....................................................... 0%
5% increase over Base EBITDA....................................................... 2.25%
10% increase over Base EBITDA...................................................... 4.00%
15% increase over Base EBITDA...................................................... 5.25%
20% or higher increase over Base EBITDA............................................ 6.00%
</TABLE>
3.2. The Current EBITDA and/or Base EBITDA used to calculate the Maximum
Bonus Pool for any year shall be adjusted as provided in this Section 3.2 if the
Company or the Entertainment Group or any entity or business included in the
Company's EBITDA for such year pursuant to Section 2.8(iii) engages in any
acquisition or disposition during such year or in any of the prior three years,
of any entity or business which (a) if wholly owned, had more than $25 million
of EBITDA in the year prior to its acquisition or disposition or (b) if less
than wholly owned, as to which more than $25 million of EBITDA was or would have
been included in the Company's EBITDA pursuant to Section 2.8(iii) in the year
prior to its acquisition or disposition (each, a 'Significant Business'). In the
event of an acquisition, the EBITDA of the Significant Business shall be
excluded from Current EBITDA for the year in which it was acquired. For each
year subsequent to the year of acquisition, all or a portion of the EBITDA of
the Significant Business for each applicable year shall be included in Current
EBITDA and shall be included in each of the years used in the calculation of
Base EBITDA. In the event of a disposition, all or a portion of the EBITDA of a
Significant Business for each applicable year shall be excluded from Current
EBITDA and from each of the three years included in the calculation of Base
EBITDA for the year in which such disposition occurs and for each year
subsequent to such disposition. For the purposes hereof, an acquisition or
disposition of an entity or business shall include a change in ownership which
results in a change in consolidation or equity accounting by the Company or TWE
for such entity or business.
3.3. The Base EBITDA used to calculate the Maximum Bonus Pool for any year
shall be adjusted in the event any change in GAAP that is effective for such
year was not effective for each
A-2
<PAGE>
of the three years included in the calculation of Base EBITDA; provided,
however, that no such adjustment to Base EBITDA shall be made unless such change
in GAAP would have increased or decreased Current EBITDA by more than $10
million in the year prior to the year in which such change in GAAP first becomes
effective. The adjustment to Base EBITDA to be made pursuant to this Section 3.3
shall consist of applying the change in GAAP to each year included in the Base
EBITDA calculation. In addition, if the change in GAAP is phased in so that the
change is applied differently in successive years, then the adjustment to be
made to each year included in Base EBITDA shall be the same as the change in
GAAP that is applicable to the year for which the Maximum Bonus Pool is being
calculated.
3.4. The Committee may in its discretion (a) determine to make an Annual
Award to any Participant for any year in an amount that is less than the Maximum
Bonus and (b) determine to make aggregate Annual Awards to all Participants for
any year that total less than the Maximum Bonus Pool.
3.5. Prior to making any Annual Award, the Company's independent auditors
shall review the calculation of the Maximum Bonus Pool and the Committee shall
certify that the performance goals have been met within the meaning of the Code
and the Regulations. Subject to Section 6 of this Plan, payments of an Annual
Award, if any, under the Plan with respect to any year, shall be made as soon as
practicable after the Committee certifies that the performance goals have been
met; provided, however, that the Committee shall have the authority to pre-pay
all or a portion of any such Annual Award but only to the extent that such
pre-payment is permitted under the Code and the Regulations.
4. ADMINISTRATION.
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan and the requirements of section 162(m) of the Code, the
Committee shall have plenary authority to interpret the Plan, to prescribe,
amend and rescind the rules and regulations relating to it and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The determinations of the Committee on the matters referred to in this Section 4
shall be conclusive.
The members of the Committee shall each be an 'outside director' within the
meaning of the Code and the Regulations. The Board may from time to time appoint
members of the Committee in substitution for or in addition to members
previously appointed and may fill vacancies in the Committee.
The Committee shall hold its meetings at such times and places as it shall
deem advisable. A majority of members shall constitute a quorum and all
determinations shall be made by a majority of such quorum. Any determination
reduced to writing and signed by all of the members of the Committee shall be
fully as effective as if it had been made by a majority vote at a meeting duly
called and held.
5. ELIGIBILITY.
Payments with respect to any year may be made under the Plan only to a
person who was a Participant during all or part of such year.
6. DEFERRAL OF ANNUAL AWARD.
Each Participant may elect by written notice delivered to the Company at
least 15 days prior to the commencement of any calendar year with respect to
which an Annual Award would be payable under the Plan to defer payment of all or
any portion of the Annual Award the Participant might earn with respect to such
year, all in accordance with the Code and the Regulations and on such terms and
conditions as the Committee may establish from time to time or as may be
provided in any employment agreement between the Company and the Participant.
A-3
<PAGE>
7. TERMINATION AND AMENDMENT.
The Plan shall continue in effect until terminated by the Board. The
Committee may at any time modify or amend the Plan in such respects as it shall
deem advisable; provided, however, that any such modification or amendment shall
comply with all applicable laws and applicable requirements for exemption (to
the extent necessary) under section 162(m) of the Code and the Regulations.
8. EFFECTIVENESS OF THE PLAN.
The Plan shall become effective upon approval by the vote of a majority of
the votes cast at a duly called and held meeting of stockholders of the Company.
The Plan as in effect on May 19, 1994 shall apply to the annual bonus payable to
the Chief Executive Officer in respect of 1994 and, subject to stockholder
approval, the Plan as amended and restated shall apply to the annual bonuses
payable to each Participant in respect of 1995 and each year thereafter.
9. WITHHOLDING.
The obligations of the Company to make payments under the Plan shall be
subject to applicable federal, state and local tax withholding requirements.
10. SEPARABILITY.
If any of the terms or provisions of this Plan conflict with the
requirements of section 162(m) of the Code, the Regulations or applicable law,
then such terms or provisions shall be deemed inoperative to the extent
necessary to avoid the conflict with the requirements of section 162(m) of the
Code, the Regulations or applicable law without invalidating the remaining
provisions hereof. With respect to section 162(m), if this Plan does not contain
any provision required to be included herein under section 162(m) of the Code or
the Regulations, such provision shall be deemed to be incorporated herein with
the same force and effect as if such provision had been set out at length
herein.
11. NON-EXCLUSIVITY OF THE PLAN.
Neither the adoption of the Plan by the Committee or the Board nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Committee or the Board
to adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options and the awarding of stock or
cash or other benefits otherwise than under the Plan, and such arrangements may
be either generally applicable or applicable only in specific cases. None of the
provisions of this Plan shall be deemed to be an amendment to or incorporated in
any employment agreement between the Company and any Participant.
12. BENEFICIARIES.
Each Participant may designate a beneficiary or beneficiaries to receive,
in the event of such Participant's death, any payments remaining to be made to
the Participant under the Plan. Each Participant shall have the right to revoke
any such designation and to redesignate a beneficiary or beneficiaries by
written notice to the Company to such effect. If any Participant dies without
naming a beneficiary or if all of the beneficiaries named by a Participant
predecease the Participant, then any amounts remaining to be paid under the Plan
shall be paid to the Participant's estate.
13. GOVERNING LAW.
The Plan shall be governed by, and construed in accordance with, the laws
of the State of New York.
A-4
<PAGE>
APPENDIX 1
PARAGON COMMUNICATIONS
EMPLOYEES STOCK SAVINGS PLAN
CONFIDENTIAL VOTING INSTRUCTIONS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TIME WARNER INC.
FOR THE ANNUAL MEETING ON MAY 18, 1995
Under the provisions of the Trust relating to the Paragon Communications
('Paragon') Employees Stock Savings Plan ('Paragon Plan'), First Interstate Bank
of Denver, N.A. ('First Interstate'), as Trustee, is required to request your
confidential instructions as to how the shares of Time Warner Inc. Common Stock
allocated to your account under the Paragon Plan are to be voted at the Annual
Meeting of Stockholders of Time Warner Inc. scheduled to be held on May 18,
1995. Your instructions to First Interstate will not be divulged or revealed to
anyone at Time Warner Inc. or Paragon. If First Interstate does not receive your
instructions on or prior to May 15, 1995, the shares allocated to your account
will be voted at Time Warner Inc.'s Annual Meeting in the same proportion as
shares for which First Interstate has received voting instructions with respect
to other participants' accounts.
<TABLE>
<S> <C>
ELECTION OF DIRECTORS FOR TERMS EXPIRING IN 1998-- Please mark, sign and date this
Merv Adelson, Beverly Sills Greenough, Michael A. Miles, Donald S. Instruction Card on the reverse side and
Perkins and Raymond S. Troubh, nominees. return it promptly using the enclosed
envelope.
</TABLE>
(CONTINUED ON REVERSE SIDE)
<PAGE>
<TABLE>
<S> <C>
THE UNDERSIGNED HEREBY INSTRUCTS FIRST INTERSTATE, AS TRUSTEE, TO VOTE AS PLEASE MARK YOUR VOTES THIS WAY [X]
FOLLOWS BY PROXY AT THE ANNUAL MEETING OF STOCKHOLDERS OF TIME WARNER INC. TO
BE HELD ON MAY 18, 1995 AND AT ANY ADJOURNMENT THEREOF, ALL THE SHARES
OF TIME WARNER INC. COMMON STOCK ALLOCATED TO THE UNDERSIGNED'S ACCOUNT IN THE PARAGON PLAN.
</TABLE>
THE TIME WARNER INC. BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES
IN ITEM 1 AND FOR PROPOSALS 2 AND 3.
For Withheld
1. Election of Directors (see reverse). [ ] [ ]
For, except vote withheld from the following nominees(s):
---------------------------------------
2. Approval of the amended
and restated Annual Bonus For Against Abstain
Plan for Executive Officers. [ ] [ ] [ ]
3. Approval of Auditors. [ ] [ ] [ ]
THE TIME WARNER INC. BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST PROPOSALS 4 AND 5.
4. Stockholder proposal
regarding cigarette
advertising. For Against Abstain
[ ] [ ] [ ]
5. Stockholder proposal [ ] [ ] [ ]
regarding staggered board.
6. To grant discretionary voting authority to management
persons regarding such matters as may properly come
before the Meeting.
MEETING ATTENDANCE
Please check this box if you plan
to attend the Meeting. [ ]
ADDRESS CHANGE
Please mark this box if you have
indicated an address change. [ ]
RECEIPT IS HEREBY ACKNOWLEDGED OF THE TIME WARNER INC.
NOTICE OF MEETING AND PROXY STATEMENT.
Signature(s)_______________________________________ Date______________
NOTE: Please sign exactly as name appears hereon
<PAGE>
--------------------------------------------------------------------------------
APPENDIX 2
TIME WARNER EMPLOYEES' STOCK OWNERSHIP PLAN
CONFIDENTIAL VOTING INSTRUCTIONS
INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TIME WARNER INC. FOR THE ANNUAL MEETING ON MAY 18, 1995
Under the provisions of the Trust relating to the Time Warner Employees' Stock
Ownership Plan ('TESOP'), which includes accounts transferred from the Time
Incorporated Payroll-Based Employee Stock Ownership Plan ('PAYSOP') and the WCI
Employee Stock Ownership Plan ('WCI ESOP'), Chemical Bank ('Chemical'), as
Trustee, is required to request your confidential instructions as to how the
shares of Time Warner Common Stock attributable to your accounts under TESOP are
to be voted at the Time Warner Annual Meeting of Stockholders scheduled to be
held on May 18, 1995. Your instructions to Chemical will not be divulged or
revealed to anyone at Time Warner Inc. If Chemical does not receive your
instructions on or prior to May 15, 1995, (a) the shares allocated to your
PAYSOP and WCI ESOP accounts, if any, will not be voted and (b) all other shares
allocated to your TESOP accounts will be voted at the Annual Meeting in the same
proportion as shares for which Chemical has received voting instructions with
respect to other participants' TESOP accounts (excluding PAYSOP and WCI ESOP
accounts).
<TABLE>
<S> <C>
ELECTION OF DIRECTORS FOR TERMS EXPIRING IN 1998-- Please mark, sign and date this
Merv Adelson, Beverly Sills Greenough, Michael A. Miles, Donald S. Instruction Card on the reverse side and
Perkins and Raymond S. Troubh, nominees. return it promptly using the enclosed
envelope.
</TABLE>
(CONTINUED ON REVERSE SIDE)
<PAGE>
<TABLE>
<S> <C>
THE UNDERSIGNED HEREBY INSTRUCTS CHEMICAL, AS TRUSTEE, TO DIRECT THE PLEASE MARK YOUR VOTES THIS WAY [X]
VOTE AS FOLLOWS AT THE TIME WARNER ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON MAY 18, 1995 AND AT ANY ADJOURNMENT THEREOF, OF ALL SHARES OF
TIME WARNER COMMON STOCK ATTRIBUTABLE TO THE UNDERSIGNED'S ACCOUNTS
UNDER TESOP (INCLUDING PAYSOP AND WCI ESOP ACCOUNTS).
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES
IN ITEM 1 AND FOR PROPOSALS 2 AND 3.
For Withheld
1. Election of Directors (see reverse). [ ] [ ]
For, except vote withheld from the following nominees(s):
---------------------------------------
2. Approval of the amended
and restated Annual Bonus For Against Abstain
Plan for Executive Officers. [ ] [ ] [ ]
3. Approval of Auditors. [ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 4 AND 5.
4. Stockholder proposal
regarding cigarette
advertising. For Against Abstain
[ ] [ ] [ ]
5. Stockholder proposal [ ] [ ] [ ]
regarding staggered board.
6. To grant discretionary voting authority to management
persons regarding such matters as may properly come
before the Meeting.
MEETING ATTENDANCE
Please check this box if you plan
to attend the Meeting. [ ]
ADDRESS CHANGE
Please mark this box if you have
indicated an address change. [ ]
RECEIPT IS HEREBY ACKNOWLEDGED OF THE TIME WARNER INC.
NOTICE OF MEETING AND PROXY STATEMENT.
Signature(s)_______________________________________ Date______________
NOTE: Please sign exactly as name appears hereon.
<PAGE>
--------------------------------------------------------------------------------
APPENDIX 3
TIME WARNER INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TIME WARNER INC. FOR THE ANNUAL MEETING ON MAY 18, 1995
P The undersigned hereby constitutes and appoints Richard J. Bressler, Peter
R R. Haje and Philip R. Lochner, Jr., and each of them, its true and lawful
O agents and proxies, with full power of substitution in each, to attend the
X Annual Meeting of Stockholders of TIME WARNER INC. on Thursday, May 18,
Y 1995, and any adjournment thereof, and to vote on the matters indicated all
the shares of Common Stock which the undersigned would be entitled to vote
if personally present.
<TABLE>
<S> <C>
ELECTION OF DIRECTORS FOR TERMS EXPIRING IN 1998-- PLEASE MARK, SIGN AND DATE THIS PROXY
Merv Adelson, Beverly Sills Greenough, Michael A. Miles, Donald S. CARD ON THE REVERSE SIDE AND RETURN IT
Perkins and Raymond S. Troubh, nominees. PROMPTLY USING THE ENCLOSED REPLY
ENVELOPE.
</TABLE>
(CONTINUED ON REVERSE SIDE)
<PAGE>
<TABLE>
<S> <C>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED PLEASE MARK YOUR VOTES THIS WAY [X]
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED, FOR PROPOSALS 2 AND 3 AND AGAINST PROPOSALS 4 AND 5.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES
IN ITEM 1 AND FOR PROPOSALS 2 AND 3.
For Withheld
1. Election of Directors (see reverse). [ ] [ ]
For, except vote withheld from the following nominees(s):
---------------------------------------
2. Approval of the amended
and restated Annual Bonus For Against Abstain
Plan for Executive Officers. [ ] [ ] [ ]
3. Approval of Auditors. [ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMEND A VOTE AGAINST PROPOSALS 4 AND 5.
4. Stockholder proposal
regarding cigarette
advertising. For Against Abstain
[ ] [ ] [ ]
5. Stockholder proposal [ ] [ ] [ ]
regarding staggered board.
6. In their discretion, upon such other matters as may
properly come before the Meeting.
MEETING ATTENDANCE
Please check this box if you plan
to attend the Meeting. [ ]
ADDRESS CHANGE
Please mark this box if you have
indicated an address change. [ ]
RECEIPT IS HEREBY ACKNOWLEDGED OF THE TIME WARNER INC.
NOTICE OF MEETING AND PROXY STATEMENT.
Signature(s)_______________________________________ Date______________
NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
<PAGE>
APPENDIX 4
CONFIDENTIAL VOTING INSTRUCTIONS
TIME WARNER EMPLOYEES' SAVINGS PLAN (Savings Plan)
TIME WARNER THRIFT PLAN (Thrift Plan)
TIME WARNER CABLE EMPLOYEES SAVINGS PLAN (Cable Plan)
INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE TIME WARNER INC. ANNUAL MEETING ON MAY 18, 1995.
Under the provisions of the Trusts relating to these three Plans,
Fidelity Management Trust Company ('Fidelity'), as Trustee, is
required to request your confidential instructions as to how your
proportionate interest in the shares of Time Warner Common Stock
(an 'interest') held in the Time Warner Common Stock Fund under
any of those Plans is to be voted at the Annual Meeting of
Stockholders scheduled to be held on May 18, 1995. Your
instructions to Fidelity will not be divulged or revealed to
anyone at Time Warner Inc. If Fidelity does not receive your
instructions on or prior to May 15, 1995, your interest, if any,
in the Time Warner Common Stock Fund (a) attributable to accounts
transferred from the Time Incorporated Payroll-Based Employee
Stock Ownership Plan (PAYSOP) to the Cable Plan will not be voted
and (b) attributable to the remainder of your Cable Plan
account,if any, and any other Plan accounts will be voted at the
Annual Meeting in the same proportion as interests for which
Fidelity has received voting instructions with respect to other
participants' Time Warner Common Stock Fund accounts maintained
in such respective Plan (excluding PAYSOP accounts in the Cable
Plan).
This instruction must be signed
exactly as name appears hereon.
---------------------------------
---------------------------------
Signature(s) Date
(CONTINUED ON REVERSE SIDE)
<PAGE>
The undersigned hereby instructs Fidelity, as Trustee, to vote as follows by
proxy at the Annual Meeting of Stockholders of Time Warner Inc. to be held on
May 18, 1995 and at any adjournment thereof, the undersigned's proportionate
interest in the shares of Time Warner Common Stock held in the Time Warner
Common Stock Fund under each of the Plans (including PAYSOP accounts in the
Cable Plan), if any.
THE TIME WARNER INC. BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ALL NOMINEES IN ITEM 1 AND FOR PROPOSALS 2 AND 3.
1. Election of Directors for terms expiring in 1998 - Merv Adelson, Beverly
Sills Greenough, Michael A. Miles, Donald S. Perkins and Raymond S.
Troubh, nominees.
FOR [ ] WITHHELD [ ]
[ ] FOR, except vote withheld from the following nominee(s):
2. Approval of the amended and restated Annual Bonus Plan
for Executive Officers.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of Auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 4 AND 5.
4. Stockholder proposal regarding cigarette advertising.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Stockholder proposal regarding staggered board.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. To grant discretionary voting authority to management persons regarding
such matters as may properly come before the meeting.
Please check this box if you plan to attend the meeting. [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
STATEMENT OF DIFFERENCES
<TABLE>
<S> <C>
The section symbol shall be expressed as............. SS
</TABLE>
